Why Property May Not Be The Best Investment: Expert Explains

Over the past few decades, real estate has been a preferred choice to grow one's money safely. Buying a house or land has been considered a secure investment that would appreciate steadily over time.

However, CA Nitin Kaushik has a different take. He has compared the gains from property and equity on X (formerly Twitter).

According to him, real returns often lie in building equities. He said the older generation which purchased houses in the 1990s for around Rs 10-Rs12 lakh now see those same properties valued at nearly Rs 1 crore.

This often feels like a jackpot, but he believes that while real estate provides emotional security and social status, it may not always be the best tool for long-term wealth creation.

He believes property typically grows at the rate of 9-10% per year, but homeowners face hidden costs such as maintenance, property taxes, and repairs, of around 1-2%, which can eat into returns over time.

He also mentioned that real estate is illiquid, which means it can be difficult to sell quickly when funds are needed.

Kaushik, however, highlighted that equity investments like stocks often outperform real estate in terms of compounded growth. He said the Sensex has delivered a Compound Annual Growth Rate (CAGR) of 13-14 %, significantly higher than the growth rate of property.

For example, an investment of Rs 1 lakh in 1995 would have grown to around Rs 22 lakh today, and an investment of Rs 10 lakh could have become over Rs 2.2 crore.

He explained, "Real estate builds nostalgia and comfort, but equity builds net worth," adding, "The real win isn't what looks big; it's what compounds bigger."