Scarcity Creates Demand

Real estate is primarily a tangible asset. Real Estate rightly procured, is either good or very good investment. Today’s man can make anything under the sun, but cannot create more land.

Estate is the only thing that adds psychological value to your portfolio. Pure tangible value. A man is weighed by the estate he owns. Real Estate is the most secure asset class one can own. For time immemorial, the biggest wars have been fought for land. In medieval times, land acquired created kingdoms. The king got his subjects to stay on his lands, cultivate them, and in turn pay him his royalty.

In the modern world, as we have bisected and dissected the planet into countries, we still fight the biggest wars for land. The reason, it is scarce. On the micros, each of us is fighting for his or her share of the estate to create homes and offices which are the essence to livelihood. Once land is acquired, it needs to be cultivated. In Urban Areas, cultivation would mean creating structures with brick and mortar for commerce or housing. What we as middle-class investors need to do is identify our niche, purely basis our financial capabilities. No matter what the size of estate we buy with our limited resources, we must understand that we need to put our monies where there is scarcity, no matter whatever the size.

I shall give you an illustration. Every time an economy is performing, just like the penny stocks in the stock market, most of us get lured into buying properties in developing areas, far from the developed patches. This is only because we are sold futuristic stories with tall promises. But, as much as land is broadly scarce, scarcity for us would mean a shortage of land in a designated suburb, purely because it’s developed. Urbanized and developed infrastructure in your city is where you need to be. This assures you of marginalizing the downside. On the other hand, ambitious and futuristic areas blossom and appreciate when a lot of parameters to urbanize the neighborhood come together. Futuristic development depends upon big business houses/developers acquiring and developing new areas coupled with the government intervention to create huge amount of infrastructure and industry around it, to create opportunity and livelihood.

This theory of growth becoming a reality becomes extremely time consuming, making our ROI (Return on Investment) is unattractive. As a middle-class retail investor, we need to be part of the real estate investment process, but tagging along with