"The Price of a Flat Never Really Falls": Finfluencer Warns Against Speculative Real Estate Traps

In India's rapidly growing economy, rising incomes during economic expansions often lead to increased demand for real estate, pushing property prices higher. The country’s ever-expanding population further intensifies this demand, particularly in urban areas where housing shortages are more pronounced.

This scarcity is exacerbated by infrastructure development in growing cities, which continues to make real estate a prime investment avenue. However, Akshat Shrivastava, founder of Wisdom Hatch, has issued a stern warning to potential investors against falling prey to speculative traps in the real estate market.

Speculation: A Dangerous Game in Real Estate

In a recent post on X (formerly Twitter), Shrivastava explained how builders in India have transformed real estate into a speculative asset. He wrote, “A house that costs ₹1 crore today will cost ₹3 crore in a few years. Why? Because the price of things goes up when there’s speculation on assets. Builders in India have found a new way to turn real estate into a speculative game.”

Shrivastava elaborated that builders often use speculative narratives to lure buyers, creating artificial demand and inflating property prices. These tactics include statements like:

• “The price of a flat never really falls.”

• “If you buy today, you can sell it in three months at X% returns.”

• “Tower A was sold at ₹X, and now Tower B is selling at 2X. You can do the same.”

Such speculative claims, according to Shrivastava, are part of a broader strategy designed to lock buyers into long-term financial commitments. He highlighted how under-construction properties, linked to convenient payment plans and eased EMIs, become a trap for buyers who end up committed to a 20-year financial burden.

The REITs Controversy: Real Estate on Steroids

Shrivastava also criticized the growing popularity of Real Estate Investment Trusts (REITs) in India, calling them “real estate on steroids.” He explained that properties owned by REIT firms are treated as assets, allowing them to add a Price-to-Earnings (PE) multiple to valuations—something a traditional builder cannot do. This system, according to him, encourages inflated valuations of real estate assets.

He further pointed out that REITs, while successful in countries like the US and UAE, operate in markets governed by robust legal systems. In India, however, weak enforcement of laws, especially in the real estate sector, creates an environment ripe for manipulation. Shrivastava remarked, “Financially ill-educated people, who have never bought even ₹1 worth of real estate, praise REITs because they’ve succeeded elsewhere. But laws function in those countries—not in ours, especially when it comes to real estate.”

Real Estate Investing: A Balanced Perspective

Shrivastava offered a piece of practical advice for those looking to invest in real estate: focus on buying genuine, tangible properties instead of speculative investments or REITs. He emphasized that real estate should be treated as a long-term, stable asset rather than a vehicle for short-term speculative gains.

The Bigger Picture

India’s booming real estate market is undoubtedly attractive, driven by rising incomes, population growth, and rapid urbanization. However, as Shrivastava warns, this very growth also creates opportunities for speculative practices that can harm unsuspecting investors. Aspiring homeowners and investors must exercise caution, avoid speculative baits, and focus on sound financial planning when entering the real estate market.

Final Thoughts

The real estate market in India is a complex and rapidly evolving landscape. While it offers immense potential for wealth creation, it also demands a high degree of financial literacy and prudence. Shrivastava’s insights serve as a timely reminder for investors to remain vigilant, critically evaluate opportunities, and prioritize genuine investments over speculative traps. As the adage goes, “All that glitters is not gold,” and in the world of real estate, not all opportunities are as profitable as they seem.