The world market is witnessing a general shakedown in all sectors. Socio-political changes around the world have put to test a variety of new investment options, both digital and physical. In this large world of up-and-coming investments, it’s always important to compare and investigate. The hot and new, against the old.
Bitcoin has taken center stage in the world of financial engineering. Now, range-bound with a low of $3900, Bitcoin estimates are through the roof — $6000 by mid-2018 and $20,000 by 2020 — a result of its varied status; as a currency, stock, and commodity, Bitcoin has beaten and is slated to beat existing assets that fall into these three categories.
So how does Bitcoin stack up against Mother Earth’s oldest investment — land? The dominant thought always viewed land as something that naturally bore returns. But the rise of a new wave, an amalgam of economic phenomena and attitudinal changes in consumers finally tore the veil. Post the 2008 Global Recession which saw the burst of the Housing Bubble (which was also the period of a rapidly growing global tech industry), investors and consumers alike, have remained wary of it.
Within this tale of woe, lies India. With a market hit terribly by inflation and rising political discontentment, the India of the early 2000s seemed nothing but doomed. Real Estate as an industry had just matured, with a variety of private developers and construction outfits being set up all across the country along with the customers to boot. And now it was being slowly cut out.
While the Indian was not affected immediately after the collapse of world markets in 2008; in 2009 it was hit by rampant inflation; consumer confidence fell and national savings disappeared overnight. But with the unprecedented rise of India as a global power — the Indian Market witnessed the rapid growth of native sectors, from IT to Civil Engineering. Real Estate was on the train too, and its most recent report the IBEF (India Brand Equity Foundation) stated that “The real estate sector in India is expected to attract investments worth US$ 7 billion in 2017, which will rise further to US$ 10 billion by 2020.” A rise of over 40% in just 3 years.
The Current Indian Real Estate Scenario
The Indian Real Estate market, while burgeoning, has hit quite a few potholes along the way. Systemic scams involving land documentation, poor bookkeeping, cooked books, diverted funds, policy changes… the list goes on. A point-to-point analysis of the current market would be as follows:
- India is ranked fourth in Developing Inflows in Asia as per the World Investment Report (2016).
- The State’s rapid policy decisions (Demonetisation, GST, Benami Property Act in particular) while shocking, have created an environment of transparency and regulations that investors, both foreign and native, are flocking to.
- Structural reforms and further liberalisation of native sectors have bumped the overall lucrativeness of the Indian Real Estate market.
- The State’s implementation of RERA (Real Estate (Regulation & Development) Act) in mid-2017, was effective in that it managed to chain developers to proper deadlines, handovers, accountability, documentation, supervision, and regulation, but at the cost of bringing the sector to a grinding halt. This did not boost consumer confidence, which was already at a record low.
- Despite having given solid returns year after year the past decade, real estate is now due for a correction in prices due to these factors — RERA, transparency laws, and other policy changes.
- All of this makes investments in real estate more of a gamble than ever before now!
Let’s contrast this with bitcoins. The world of this digital currency has changed the way businesses and individuals view finance. With the rise of cryptocurrencies like Bitcoin and Ethereum, the possibility of unfettered fiscal freedom seems alluring. Bitcoin being flashier and larger tends to dominate the digital currency market. Bitcoin has expanded rapidly over the last 6 years, at an outstanding, never seen before pace.
- The global market for Bitcoin has grown 6 times faster and larger than the entire tech bubble of the 1990s.
- The global response to Bitcoin is haphazard but strong. Socio-political conditions around the world have made Bitcoin attractive for users large and small, from governments to pre-teens sitting at home. The communities are large in both hemispheres and play an important role in influencing the market.
- The barriers-to-entry in the Bitcoin market is close to negligible, with start-ups around the world involving themselves in warehouse management, cloud computing, mining, engineering and more. For an end customer — it’s even easier — simply get started on an exchange like Unocoin.
- Bitcoin’s appreciation leaves everything else, let alone real estate, far behind in the dust. Where else have you heard of 400,000% appreciation in less than a decade?
- Bitcoin user accounts are slated to go up by 50% by 2018 and more governments around the world — Ukraine, Japan, Estonia, and Korea — are adopting Bitcoin for official and daily transactions, increasing its legitimacy (and therefore, potential price) in the world order.
- Bitcoin forecasts from even the most skeptical sources are phenomenal, with claims that the currency will value at $50,000 in a decade.
Should You Switch?
The Bitcoin market is ripe, and its fruits will grow sweeter every day. But there still remains the larger question — whether the digital currency market will be shut down by governments worldwide and relegated to fringe communities. Or whether the end will be an economic one — the standard bubble and crash.
What is important to remember is that strategies involving Bitcoin must be smart and sharp. Upon further analysis (including counter-markers) we’d suggest a conservative strategy involving an period of 3–5 years and a return of approximately 5 times. For those more aggressive amongst us, a safe period would be 7 years. Why these recommendations you ask? Because bitcoin solves real-world issues, is a clear alternative to fiat money, and has a lot more going for it, as we’ve covered here.
The general consensus with regard to the Indian real estate market has always been absolute trust. However, with the recent changes, the government has pushed, while with the best intentions, are going to impact the industry in the short term. An impact that would make it wise to keep away from the sector in the short term.
As such, one would have to ask — quick and large returns (validated by support from governments of multiple countries) or a long-term play that is going to witness a rough patch ahead, however short it may seem.