The Right strategy is to sell real estate sector (over supplied there are no buyers as per data) and buy equities (NIFTY P.E. is at to !) and bonds (yield is "#) etc... Real estate rental yields are around crore. You also have the option o* renting the Rs .$# .%# across &etros. 'hat is rental yield( Ta)e *or e+a&ple a house ,orth Rs crore. I* you have crore house .%#.1nd i* /-0..34 that

to buy the house outright you pay Rs ,ith rentals at around Rs

%-... per &onth. Total rent *or a year ,or)s out to Rs /- 0-.... Total rent

divided by the cost o* the house is the rental yield- ,hich in this e+a&ple ,or)s out to you are in 2.# brac)et then Rs. %...34 p.&. 5ess Rs.$6..34 Total Rent Received Is Rs. &eans Net rental yield is p.a.only

.$# p.a. Inflation is at 9.5% p.a. and Rental yield is at 1.5%

7)- so rental yields are at .$#p.a. to .%#p.a. levels- ,hy does it present a co&pelling case to sell a house ,orth Rs crore and invest it in bonds and equities( The argu&ent *or selling the invest&ent .$# to .%# and buying bonds and equities is that you are e**ectively *unding your invest&ents at p.a- ,hich is the rental yield ,hich is less then saving ban) account deposits 8o, is it that i* you sell a real estate invest&ent- your *unding cost *or investing in bonds and equities is 9ust Rs .$ #( You have been earning 9ust .$# every year as the rental yield on your invest&ent o* .$# on your invest&ent as you .$#- ,hich in e**ect is your crores. 7nce you have sold your invest&ent- you stop earning

stop receiving rent. 8ence your opportunity cost o* not receiving rent is borro,ing cost *or *unding your invest&ents in bonds and equities.

Ten year bench&ar) govern&ent bond yields are at levels o* "#. Your *unding cost is 9ust


You earn an arbitrage inco&e o* !.$# by selling your real estate invest&ent and buying the govern&ent bond. Your arbitrage inco&e can co&e do,n only i* rental yields rise over the years ,hich is not possible due to oversupply in the &ar)et. I* you are an equity investor- you can buy into the :ense+ or Ni*ty (P.E.is dividend yield on the indices are around ! attractive still). The .$#. 8o,ever

.$# and i* the :ense+ and Ni*ty values do not rise- you ,ill .# every year- you &a)e a clear .# gain on your

be earning a .# by selling real estate and buying equities as your cost o* *unding is even i* the :ense+ and Ni*ty rise by 9ust act together. invest&ent annually. Equities ,ill rise &uch higher than

.# annually going *or,ard i* India gets its

The ris) you ta)e in selling your real estate invest&ent is that prices continue to rise despite all odds. Prices have risen &ulti *old over the /..%4 2 period even as the econo&y has stuttered ,ith gro,th rates co&ing o** *ro& "# levels to $# levels. 'hy should real estate prices not rise despite odds( To ans,er the question- can real estate prices rise despite odds( You ,ould need to reason out the *ollo,ing. 1) ;ortgage cost is at .# and above levels ,hile rental yields are .$#. The %.$# di**erence bet,een yields and borro,ing costs is huge and real estate prices should rise by !# every year 9ust to brea) even. <) In*lation in the econo&y is running at ".$# levels (*ive year average =onsu&er Price In*lation)- household inco&e levels have hardly )ept pace ,ith in*lation and price to inco&e ratio is around ! ti&es- even *or a senior level pro*essional in non4e+traordinary pay co&panies. Real estate a**ordability has co&e o** sharply. 8ence *or real estate prices to rise- there &ust be a very strong reason such as a sharp pic)up in econo&ic gro,th- sharp *all in interest rates

and high liquidity in the syste&. I* this does happen- the pri&ary bene*iciaries ,ill be equities and bonds as these asset classes have reacted to econo&ic do,nturn and in*lation and the last bene*iciary ,ill be real estate as it is highly overvalued given any )ind o* yardstic). T,o ;a9or real estate co&panies price in :ense+ >5F IN /..% Rs. /..34 per share and no, nearby Rs. /.34 per share ?nitech Rs. $6034 per share and no, in /. 6 is Rs. estate *ro& last % &onths. .34 per share *ro& last $ years ;ar)et capital is depreciated &ore then %.# 4". # . Investors are pulling &oney *ro& real

Note : If you attended our financial planning session and real estate planning session then please collect some eye opener updated knowledge based ideo! sting operation of builders ideos and it is learning that how builders are cheated to e eryone! financial educational

process for you and your ne"t generation. #nd also the Real data of empty flat in $ ma%or cities including &une. 'o you know ne er buy property from builder in supply cycle because it is more costlier as long as ()% *$)%. #fter watching all this generation too. ideos you can reali+e how to educate myself from mediators and builders so that nobody can cheat me and my ne"t

,he author is independent financial planner and he is not represent any third party organi+ation.

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For Further >etails )indly =ontact@ Than)s and RegardsAirang Bandhi Independent Financial Planner http@33,,,.*pindia.in ;4"./% 6/ $$