Real Estate Investments

People will tell you about how the value of a certain plot of land or house grew 50 or 100 times in 40-50 years. This sounds fabulous, but is actually nothing special. The BSE Sensex has become 300 times its value in 38 years. Even a gain of 100 times in 50 years comes to only 9.60% per annum, which is good, definitely not exceptional.

 There are perhaps five sources of gains in the price of a given property, and the final profits is a product of these:
  1. The original change in usage of a piece if land from agricultural or barren to residential or commercial
  2. The development of physical infrastructure which makes this land usable for the new purpose
  3. The improvement in livability or commercial viability as the area becomes more and more populated
  4. The periodic booms and busts that afflict real estate
  5. The general inflation of the economy that becomes part of the visible change in the property's price

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