Is Goan real estate a good investment?

Disclosure: We feel, generally, real estate isn’t to be invest or speculated in because inherently it’s the most basic necessity for anyone who is climbing from the lows of the socio-economic ladder and when we speculate, we are collectively helping with other speculators, deny someone this most basic need.

However, after around 40 years on this planet, realisations dawned that good karma and compassion are mostly written and spoken concepts, with little to no use in a modern world where humans have become semi-bots driven by one thing, and one thing only, MATERIAL GAINS.

So here we are trying to find a middle ground between what we believe and what the populists want.

The no non-sense (non-sense being socially transformative thinking) we believe real estate is a good asset class today considering others like equities, bonds, precious metals, and cryptos.

This for three reasons, (i) you can bet your life on the fact that it will grow at least in line with inflation if not higher, (ii) it is very difficult to be taken away from you by fraud (so long as it exists in a unitary form, not plane land), and (iii) gains on it are taxed with capital gains which are lower than income tax slabs.

Bonds and fixed deposits, will keep shrinking as an asset class in India with government taxing them with income tax slabs, and equities, while for value hunters is a great asset class, but in India with valuations being where they are and close to zero fundamental research, it isn’t advised for folks who are risk averse.

We believe, real estate, can be considered a good investment for folks of all age and risk profile, if it can tick two boxes for you,

(i) you are not buying something that has run up 100-200% in the past 5 years creating meaningful risk of a correction / profit-taking, and

(ii) it is something you have a good chance of using at least periodically or consistently in the medium term, as a primary home, vacation home or a retirement home.

The case for it to be used at some point is very critical in our mind, because God forbid if the upside you are expecting doesn’t come, you are at least calming yourself that you used the place over a certain period so it wasn’t all for nothing.

What this means, is if you are from Mumbai, and you are purely investing in Goa for returns, while your idea of retirement isn’t to be too far from Mumbai, then you are better off buying something close to Mumbai even if you aren’t as bullish on it as you are on Goa.

We feel, the ROIs pitched today in Goa on rentals will fizzle out meaningfully in the next 3-5 years. The prices people are paying on some very average constructions, made by developers jumping in to cash in on the tide will also have plenty of maintenance issues which will see a meaningful amount of money you generate through rentals go away in the medium term.

Best thing today if you want to invest in Goa, is to go into villages that have not appreciated much in the past 3-4 years, think Colvale, Tivim, Sircaim, Assanora, Pernem, South goa. Also, if you were to trust us, avoid daily rentals altogether, as in these areas you will get natural price appreciation of 10-15% each year for the next 5 years quite easily.