Why Invest In Property Now?
By Michael Yacoub Michael Yacoub
Level: Basic PLUS
Michael Yacoub is the CEO and Founder of Advantex International. Advantex International is located on the Gold Coast, Qld Australia and provides business consulting, development ...
The old saying that there is nothing safer than bricks and mortar still rings true. This maxim sounded clear and strong during the events of the recent turmoil in the global stock markets, which have endured a period it would rather forget, and still reeling. Meanwhile, we have seen a number of investors lose hundreds of millions through the liquidation of shares across the globe in a very short span of time.
It is largely understood that in any investment's lifecycle there will always be peaks and troughs. As market fundamentals change certain investments will look more favorable than others. This is particularly true with both real estate and the equity markets, where at certain point, any change in market direction will make shares look more favorable than property, and vice versa. It is therefore important that people understand the risks and limitations of the property market as well. Illiquidity, low occupancy rate, rent defaults and cost of borrowing are some of the concerns investors usually ponder before making their investment decision.
Provided an investor has the capacity for a long-term view and is careful in their choice of property investment, then bricks and mortar will always have an underlying value. It all boils down to spotting end-user demand and making money at buying time away from emotional or irrational attachment, regardless of what property type is being invested. There are many properties in need of TLC providing investors the opportunity to add value through alterations and renovations.
Financial advisors, brokers and real estate experts always suggest that investors should have property as a part of their diversified portfolio which might also include shares and cash. However, some investors believe that portfolio diversification is a protection against investor ignorance. In my view, people who are comfortable with certain asset class, because they understand its dynamics and economical characteristics, usually adopt a strategy of portfolio concentration in that asset class being property, stocks or cash. They largely deviate from following conventional investors' diversification dogma due to the intensity of their knowledge of and feelings towards their preferred investment scheme.This article has been viewed 4 time(s).
Article Submitted On: February 07, 2011
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