Gold vs Real Estate: Which investment option is better? Is yellow metal a good asset choice?

When it comes to investment, both gold and real estate have their own benefits and losses. While gold rates have been on the lower side this year, the real estate sector is witnessing an uptick following the covid lull. Be it gold or real estate, traditionally Indians have preferred to park their money in these two options. However, with the emerging time when there are a lot of investment options available in the market, investors are often worried about whether they should choose gold or real estate. Experts say that both real estate and gold come with their own sets of benefits and investors should choose wisely based on their needs. 

Amit Khare, AVP- Research Commodities, Ganganagar Commodity Limited said that investments can give you maximum returns when you choose the right option and invest accordingly. "There is no such thing as this option is best. It all depends on the need,  purpose, global scenario and risk appetite of the investor. If we talk about long-term investments, people have preferred gold and real estate. If we talk about facts and figures of the last 10 years, then according to data, gold has given a 70.12% return and Nifty Realty has given 61.21%, so we can say both have given almost the same return over time. We also suggest that a person should invest 60% of their corpus fund in Gold and 40% in the real estate because Gold is looking attractive as compared to real estate for 2023.

Jitendra PS Solanki, a SEBI registered tax and investment expert, said that while gold is a hedge against inflation, real estate is a growth asset. 

"Gold is mostly considered a hedge against inflation because it can be redeemed quickly in the time of emergency and beats inflation in long-term to yield a healthy return. Real estate is also a growth asset but the biggest negative of real estate is that it requires high capital. If a downfall comes in the RE sector, it's mostly prolonged. When it comes to long-term investment, real estate does give you a higher return than gold. However, it's not an asset that can be relied upon emergency as it takes time to move out of the real estate asset. Both are good assets and gold is considered to be a good allocation in one's portfolio but we don't suggest a high investment into it as gold is more of a hedge investment against inflation," said Solanki. 

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Anurag Goel, Director of Goel Ganga Developments, said that since gold is used as a hedge against inflation, it means that the return from gold is proportional to inflation. He said that gold shines when the paper currency depreciates and thus renders a nominal return. The longer you own real estate, the more valuable it becomes, he added.

Suren Goyal, Partner, RPS Group, said that real estate has the potential to generate consistent income while also providing tax benefits. "Real estate, whether residential or commercial, has the potential to generate passive income for investors in the form of monthly cash rentals, which gold investments cannot," said Goyal. 

Amul Kumar Saha, Chief Digital Officer, MMTC -PAMP said that anecdotal wisdom has always pitched gold to be a safe investment, especially in times of crisis and fear in the market. "The trick is to diversify one’s portfolio and keep holding gold as per one's appetite. Gold is deeply rooted in Indian culture. Over the past 40 years, it has, on average, provided annual returns of 9.6% and is considered an investment of choice by most Indian households," said Saha.

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Sudarshan Lodha, Co-founder and CEO of Strata Property Management said that while investing in real estate requires a larger investment compared to gold, real estate is far more stable and provides a higher rate of return on investment.

Ankit Aggarwal, MD, Devika Group, said that gold is good for short-term investment as it aids in achieving immediate financial goals. Real estate, on the other hand, is a reliable investment that provides a steady return over time. 

Experts thus suggested that one should invest in gold if they are looking to monetize the asset quickly in times of emergency while one can rely upon real estate in the long run.