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Comment by chvid | Hacker News Reader

There is collusion between banking, real estate developers, agents and politicians in the western world too ...

I actually I think we invented this stuff.

PS: 3% return p.a. for a real estate investment? Amazing; around here real estate investments return zero or below and investors count on property price appreciation, tax deductables or maybe rent increase.

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Real estate investment is the new Swiss bank account. It's acceptable to take some losses every year, if it means you get to keep your hoard.

In Indian context, it's below inflation. Cost of management and maintenance is also need to be added so effective it will be between 1 and 2 percent. Not great for developing country where inflation swings anywhere between 5 to 9 percent.

Depositing same money in bank will give more than twice the return.

The property (the house) is "inflation free/resistant":

Money is subject to inflation, because houses (and other goods) rise in price / money is watered down.

So: You may have no gain, but your savings are protected from dropping 5 to 9 percent each year, if "you have it invested in real estate".

Sounds good to me.

Well I may be wrong but you will be true only if I can't sell it at a price significantly higher than inflation.

I do not not see that happening because price correction have already started if you are an individual seller.

For politically connected developers, game is different.

In India inflation is like 4% and growth rate is 7%. I think anything less than 15% p.a. return is not worth the risk at all.

If inflation is >4% then rental income and costs should also grow around that fast.

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