Would Real Estate Take the Path Of Gold Crash?

While the retail investors in India are targeting primarily the gold and real estate sector, experts opine that the real estate prices in India would doubtfully take the path of gold and drop.

Samir Jasuja, the founder and chief executive of PropEquity, a real estate research firm says that the decline in gold rates could have created some knee-jerk reactions and could impact short-term sentiments. Generally gold and real estates have their own features that would affect their prices. Looking the impact, it may look that gold prices and real estate prices are correlated, but the demand-supply equation for gold and real estate are operated in different ways.

Mr. Jasuja also added that the dispute about the sudden drop in gold prices would have a cumulative effect on real estate would not be correct.

Gold prices crashed internationally last week, after the European Commission said that one of the European Union countries Cyprus would have to sell gold of worth 400 million Euros, (which is around Rs. 2,845 crore in Indian Rupee) to bridle in its fiscal shortage.

Mr. Anuj Puri, Chairman and Country Head at real estate consultant Jones Lang LaSalle India while talking about the fundamentals of India real estate said that one may think that the correspondence between gold and real estate prices may look same, but the demand drivers for real estate and the precious metals are different.

Many experts do agree that the underlying drivers of the market differ and also say that investment in gold is more suitable for asset class who mainly look for resourceful trading, since gold can be purchased in small or large amounts and can be sold quickly, whereas investment in residential real estate sector is not the best option for short-term investors.

Mr. Puri also said that more regulations and policies are introduced to reduce the tittle-tattle in the real estate sector and the lowest entry point in this sector is much higher than gold.

Mr. Jasuja also added that the real estate is basically a long-term investment hence the entry price will be high.

According to the Multi Commodity Exchange of India, gold has declined to 18.21 Percentage to Rs 26,548 per 10 grams from its topmost price of Rs 32,460 per gram on 26 November. However, it has increased by 6.35 Percentage in the past five days.