Real Estate: A Hedge Against Inflation with 13% Annual Growth

Housing prices have appreciated by a 13% CAGR over the last two years, making real estate a favored investment for hedging against inflation. Real estate not only provides rental income but also capital appreciation, offering portfolio diversification and mitigating inflationary pressures.


PTI | New Delhi | Updated: 13-06-2024 18:54 IST | Created: 13-06-2024 18:54 IST
Real Estate: A Hedge Against Inflation with 13% Annual Growth
AI Generated Representative Image
  • Country:
  • India

Housing prices appreciated by a compounded annual growth rate (CAGR) of 13 per cent in the last two years, property consultant Anarock stated on Thursday, highlighting real estate investment as a solid hedge against inflation.

Investments in real estate generate rental income and add value through capital appreciation, Anarock emphasized.

'Inflation gradually increases the general prices of goods and services, eroding the purchasing power of money. For investors looking to preserve and grow wealth amidst inflationary pressures, real estate has become a popular hedge,' Anarock explained in a statement.

Consistent urbanization combined with steady population growth spurs housing demand, they noted.

'As more people migrate to cities for better opportunities, the rising residential demand pushes prices upward. Real estate investments generate rental income, which potentially grows over time in response to inflation. Landlords typically adjust rental rates as the cost of living rises,' Anarock added.

According to Anarock, real estate assets can also be leveraged to borrow funds for more acquisitions.

'Real estate investments offer diversification benefits within a portfolio,' said Shobhit Agarwal, Managing Director and CEO of Anarock Capital.

'Unlike financial assets like stocks and bonds that may suffer due to inflationary pressures, real estate, encompassing residential, commercial, and retail, provides a tangible asset with intrinsic value. Adding real estate to investment portfolios can mitigate risk and boost long-term returns,' Agarwal added.

Anarock noted that housing prices have continuously risen since 2013, and in the past two years, appreciated at a CAGR of 13 per cent. Meanwhile, CPI inflation moderated to 5.4 per cent at the end of FY24 from 6.7 per cent in the previous fiscal.

This trend highlights real estate prices' clear outperformance compared to inflation, Anarock concluded.

(This story has not been edited by Devdiscourse staff and is auto-generated from a syndicated feed.)

Give Feedback