Real Estate: A Shining Star in Turbulent Economic Times
Real estate investments have emerged as a reliable hedge against inflation, with housing prices appreciating by 13% CAGR over the last two years.
Real EstateInflationHedgeInvestmentAnarockReal EstateJun 13, 2024
Inflation, which gradually increases the general prices of goods and services, erodes the purchasing power of money. However, real estate investments offer a tangible asset with intrinsic value, generating rental income and adding value through capital appreciation. As Anarock emphasized, inflationary pressures can actually increase the value of real estate investments, making them an attractive hedge against inflation.
Consistent urbanization, combined with steady population growth, has spurred housing demand, leading to a rise in residential prices. Real estate investments generate rental income, which potentially grows over time in response to inflation. Landlords typically adjust rental rates as the cost of living rises, ensuring that investors can keep pace with inflation.
Moreover, real estate assets can also be leveraged to borrow funds for more acquisitions, providing investors with a valuable source of financing. According to Shobhit Agarwal, Managing Director and CEO of Anarock Capital,
Frequently Asked Questions
Why is real estate considered a hedge against inflation?
Real estate investments generate rental income and add value through capital appreciation, which can keep pace with inflation, thereby protecting investors' wealth from erosion.
How has urbanization affected the real estate market?
Consistent urbanization has spurred housing demand, leading to a rise in residential prices and rents.
Can real estate assets be used to borrow funds for more acquisitions?
Yes, real estate assets can be leveraged to borrow funds for more acquisitions, providing investors with a valuable source of financing.
How has real estate performed compared to inflation in recent years?
According to Anarock, housing prices have appreciated by 13% CAGR over the last two years, outperforming CPI inflation, which has moderated to 5.4% at the end of FY24.
What is Anarock Capital, and what services does it offer?
Anarock Capital is the investment arm of Anarock, offering a range of services, including investment advisory, asset management, and capital markets.
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