As investors reassess their portfolios in 2025, the debate between investing in gold and real estate has gained new momentum. Real estate is now supported by enhanced financing options, lucrative returns, and the backing of policies to become the top choice amongst long-term investment planning.
In 2025, the Indian economy is brisk with infrastructural expansion, paying attention to the ever-growing urban housing demand, and rising disposable incomes. These macroeconomic factors complement the performance of the real estate sector most closely. Gold, on the other hand, reacts mostly to international factors like the dollar's strength, global interest rates, and geopolitical instability,while real estate reacts mostly locally, to its growth drivers such as infrastructure projects led by the government and initiatives for smart cities.
This year brought enough policy and urbanization trends to make the property markets of Tier 1 and Tier 2 cities increasingly attractive, further making real estate investors a favorable choice.
Real estate offers better returns & long-term value
In essence, gold offers mere value preservation. On the contrary, real estate is of dual advantage, creating consistent rental income and capital appreciation for investors. Average rental yields are looking up this year across Indian metros, with the average lying somewhere between 2.5% and 4%, commercial properties earning even better returns.
Moreover, cumulative returns for over a 10-year period have traditionally been in favor of real estate against gold, when rental income is factored in. Hence, real estate is a better asset for investors looking at medium to long-term goals such as retirement, children's education, or the creation of wealth.
Inflation level and asset performance
Gold has traditionally been perceived as an inflation hedge, but in an economic situation where inflation is structural and remains for long, land and building acquire the utility of a better shelter. Both property values and rental incomes tend to increase with inflation, thereby protecting and enhancing their real purchasing power.
With inflation expected to be in the range of 5-6% in 2025, real estate offers protection against erosion of currency and also offers some growth potential. The price of gold is safe yet does not provide for any meaningful income.
Also Read: Gold Investment Demand Rises 170% Amid Volatility and Geopolitical Tensions
Tangible benefits & portfolio diversification
Real estate offers a tangible physical asset; that can be monetized of avenues include resale, leasing, or redevelopment. It is also a strategic diversifier in any investment portfolio. Gold remains highly liquid but does not generate cash flow unless sold.
Increasingly, various avenues are allowing access to real estate dueto assistance in home loans, government subsidies, and Real Estate Investment Trusts (REITs). Each of these avenues allows an investor to further diversify within the sector itself; from residential to commercial to hybrid spaces.
Contrary to this, gold remains a passive asset, with zero productive utility besides during resale or financial emergencies.
Policy support and tax incentives for 2025
In the year 2025, government incentives will very much favor the real estate sector. These include income tax deductions on home loan interest and principal repayments under Sections 24 and 80C of the Income Tax Act, GST benefits on affordable housing, and subsidies under PMAY for first-time buyers.
Such benefits tend to decrease the effective cost of ownership and increase net returns, the dimension which gold simply does not offer. While gold profits attract capital gains (short- or long-term depending on the holding period), real estate investments have also other forms of relief through structured indexation and exemption from reinvestment.
Looking ahead
Gold may still shine for 2025, but the star of investments is real estate. Property investments, through higher long-term returns, stable incomes, inflation growth, and policy support, jell with the changing financial goals of modern Indians. For investors seeking to build sustainable wealth, real estate clearly leads the way.
About the Author
Amit Mamgain, Director, Yugen Infra
With decades of demonstrative experience in the banking and finance sector and a vault of knowledge in marketing and business development, Amit Mamgain, an MBA from IMS Dehradun, brings a wealth of intellectual assets as a director to the Yugen Infra. The former banker won uncountable feathers in his cap while having enviable stints at the country’s top financial institutions such as Yes Bank, HDFC and Kotak Wealth. This exceptional combination of finance and marketing skills helped him align operational goals at Yugen Infra with the company’s vivid vision and long-term growth plans.
By harvesting his profound knowledge and expertise in the corporate sector, Amit immaculately analyses market trends, and based on these insights, he develops feasible and viable plans for a realty brand that entered the market with a grand residential project near New Goa International Airport, also known as MOPA. This ambitious project is progressing at a fast pace, and it is expected to enthral both end consumers and investors upon its completion. Being at the helm of Yugen Infra and one of the key propellers of their pilot project near MOPA, Amit is actively involved in strategy formulation and execution processes on various fronts.
