Real estate is composed of property and improvements, including houses, fixtures, highways, structures, and networks of services. Property rights, grant land, improvements, and natural resources such as rocks, trees, livestock, water, etc. a title of possession.
To reduce the total investment risk, the addition of real estate as an asset class in one’s investment portfolio adds flexibility. Therefore, like any project, there are disadvantages of real estate.
The COVID-19 pandemic has vastly affected the global economic order.
As it is named,’ The New Normal’ would be related to newer job habits, changed management policies, and deeper business obstacles.
The most recent crisis of the leading mutual fund, which unceremoniously put an end to six of its debt mutual fund schemes, scared even the most carefree investor.
Rejigging one’s investment portfolio to satisfy the demands of this ‘new standard’ is the need of the hour in such a situation, where market uncertainty is at an all-time peak. So, it is important to note both the pros and cons of investing inland.
Advantages and Disadvantages of Real Estate
Here is a brief overview of the pros and cons of investing in real estate during Coronavirus:
There are impending project delays:
Project delays are inevitable, in situations of full lockdown and construction workers returning home. In the last few years, the real market, especially the residential segment, has already faced project delays, regulatory changes, and low sales. Building on abandoned infrastructure has come to a full standstill around the world due to the Coronavirus pandemic.
Liquidity may become a problem:
With virtually no transactions taking place and no international funding at hand until the lockdown expires, developers will fail to pick up the rate. The investment will eventually start to flow in and so far, the government has not approved any bailout package for the industry, which is an issue of concern.
Uncertain progress in economic terms:
In the United States, the unemployment rate is projected to hit 15 percent. With no work insight, it will take far more to kick-start economic growth than liquidity injection.
Price rises may not exist at all:
Although it is speculated that property values will see an upward trend after the lockdown is over, predictions vary. Initially, investors may want to leave their assets after the pandemic time. So, prices (i.e., investor-held property) in this segment may drop. Many companies facing liquidity shortages can want to disrupt existing price points. However, the price points will revert to the rate we had seen before the pandemic after the initial phase finishes.
However, in the aftermath of the pandemic individuals would be more interested in engaging in products that have a tangible impact on their health, protection, and future. Millennial investors who have stopped buying in their own homes would still consider investing in one. The comfort and protection of staying in one’s own home have been understood by those who live in rental housing. At the earliest, this segment is expected to make the transition from ‘fence-sitters’ to ‘real buyers.’
The Real Estate Benefits one can get, are as follows:
- You can buy talks, get a better offer.
- At the lowest, home loan rates are
- Currently, the best bet is Real estate.
- Preferable deals include a 100 percent refundable booking balance.
- You should rent out the property to pay-off the EMI until the lockout is over.
Therefore, taking into consideration the pros and cons of investing in rental properties, it is clear that this might not be a good time to invest in real estate. Hence, the disadvantage of real estate.