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The Land Investment Myth – Why Equity Still Leads
Investment psyche is that “land always appreciates” and that one can never make a loss on real estate if they hold it long enough. While the appeal of land as a tangible, scarce resource is undeniable, this notion often overlooks critical financial realities—particularly the time value of money, liquidity risks, and hidden costs. In contrast, equity markets, despite their perceived volatility, have consistently outperformed every other asset class in the long run, including land, gold, and fixed deposits.
Land does not always generate inflation-beating returns. Yes, certain parcels of land in urban centers have appreciated dramatically, but such cases are exceptions, not the rule. According to RBI’s All-India House Price Index (HPI), the average annual appreciation in residential property prices across major Indian cities has been around 5–6% CAGR over the past decade. After adjusting for inflation (~5%), real returns are marginal. Factor in stamp duty (5–7%), registration fees, maintenance costs, property tax, and low liquidity—and the effective return dwindles further. Also, land generates no recurring income, making it an illiquid and passive asset.
The Nifty 50 has delivered a CAGR of ~11% over the past 20 years (2005–2025), even with multiple crises in between—Lehman, COVID-19, and geopolitical conflicts. A SIP of ₹10,000 per month in a Nifty 50 index fund over the last 20 years would have grown to over ₹90 lakh today, against a total investment of just ₹24 lakh. That’s a 3.75x return on capital, with full liquidity and zero maintenance hassle.
According to Credit Suisse’s Global Investment Returns Yearbook 2023, equities have delivered an average real return of 5–7% annually over the past century, while bonds and real estate have trailed significantly. What surprises many investors is that equity is the only asset class that has consistently outpaced inflation and created wealth across generations, despite short-term drawdowns.
Equity as an asset class has become more accessible and transparent than ever. With mutual funds, ETFs, and PMS platforms, investors can build diversified portfolios with low entry barriers, high liquidity, tax efficiency, and no legal complexities. Unlike land, where pricing is opaque and litigation risks are high, equity investing is regulated, data-driven, and relatively hassle-free.
This is not an argument against owning land—but rather against the blind belief that it’s risk-free or superior. Land can be a good investment in specific contexts—such as planned urban expansion or strategic commercial zones—but it’s neither liquid, nor immune to price corrections or legal complications.
This website is intended for informational purposes only and does not constitute an offer to sell or a solicitation to invest. Investments in Alternative Investment Funds are subject to market risks and may not be suitable for all investors. Please consult your financial advisor before investing.
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