There are definitely alternatives to gold and real estate as both of them can be very good investment opportunities but under different circumstances. Gold should remain on the list of anyone interested as it retains its performance in terms of liquidity and inflation protection while performing poorly during unsure times making it great for people with a low tolerance for uncertainty. On the other hand, those who can afford a bigger investment and are planning on holding on to it for longer might find investing in real estate more favorable.

The trade-off however, can be less flexible while having a lot more rental income along with an appreciated property value when making the sale, and even though it can take quite a while to maintain or sell an estate, the effort might be worth it. It is a very important thing to mention that there are several aspects that should be taken under consideration before estimating the asset class that might do well in the year 2025, for inflation and interests will correlate with the demand and prices of the specific assets. Gold and real estate are impacted on a large scale by inflation and interest rates in the year 2025, meaning that investors should cater to their individual needs and financial situations.

Gold is indeed a safe asset to hold most of the times, especially in times when the entire economy is under a lot of pressure and going through unpredictability but real estate would be better suited when holding for a long duration. Several worldwide elements impact the prices of gold. A strong dollar limits the purchases of gold making it more costly, however, the weakness of the dollar adds to the gold prices, thus influencing them. With the increasing levels of unpredictability on a global scale and a downfall in US Fed rates, a further increase in the price of gold is expected.

On the contrary, the Indian growth story helps in the real estate space. Land is a constraint in metropolitan areas which means economic growth and expansion of earnings increase the demand while the prices are pushed further by the constraints. The improvement of metropolitan roads, the establishment of metro systems and the erection of smart cities are all encouraging the rise of the cost of real estate in the surrounding areas. In the subsequent year both the asset classes can be expected to grow.

While real estate enjoys the propellers of the growing economy and improving infrastructure of India, the movement of gold is affected by several unpredictable political and economic issues globally. It would be advisable to maintain a cautious approach and try to spread investment evenly across both categories of assets. But in the year 2025 onwards, real estate could offer better profitability if approached cautiously.

“From 2023 to 2024 Dhanteras, Gold prices have shot up by 30%. While in a similar period, Real Estate has seen close to 20% growth. These were driven by factors relevant to these asset classes and it is important to understand how these factors will change in 2025. During times of Geopolitical and economic uncertainty, Gold becomes the choice of asset class to park money in hard assets. 2023 and 2024 have seen multiple instances of such events like the unrest in the Middle East and Europe, these have contributed to gold seeing inflow as an investment asset,” as per Avinash Rao, Founder, Alt DRX.

“From India’s point of view, we import a lot of gold and an increase in dollar prices will make the gold prices go up and reduce demand in the country. Currently, rising global uncertainty and a reduction in US Fed rates are expected to sustain higher gold prices, though unless there are significant spikes in geopolitical tensions the growth will be gradual as per market factors linked to interest rates and dollar value. Real Estate, on the other hand, has benefitted from pent up pandemic demand and growth in the country driven by economic growth and infra development. Real estate in tier 1 cities has seen 50% and more growth in values and rentals. The industry after 3 years of rapid growth is now coming closer to the linear growth curve at a country level. That said, there are pockets and cities which will see hyper-growth in 2025 as well,” added Avinash Rao.

Both asset classes have seen stable asset-backed growth. If you are looking to bank on geopolitical instability then gold is the asset class to park money in, if you can identify the next growth stories of the country real estate has the potential to give high returns.

Disclaimer

The recommendations made above are by market analysts and are not advised by either the author, nor Greynium Information Technologies. The author, nor the brokerage firm nor Greynium would be liable for any losses caused as a result of decisions based on this write-up. Goodreturns.in advises users to consult with certified experts before making any investment decision.