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Real Estate Trophy Asset vs Other Investment Options

Property Investment

Aug 4, 2021

Selecting the right market to invest in is often confusing due to the various investment options available these days. Be it investing in Stocks, Bitcoin, Bonds, good old Gold or Real Estate - the choices are endless.

While all investment assets generate returns, the asset that provides both long and short term returns, is a proven store of value and makes a secure investment is none other than the ever-popular Real Estate Trophy Asset.

What is a Trophy Asset you might ask?
A Trophy Asset is used to describe a property that is considered exceptionally rare and in high demand by investors. For example luxury private pool villas such as Kimalhai Villas - Seaside Villas Phuket and Coral Cove Valley Villas - Koh Samui, in exotic island destinations are considered ‘trophy assets’ as the land the villas occupy is scarce, in high demand and appreciates in value.

For decades now, real estate has been the traditional choice of serious investors and one of the most secure ways of building wealth. It is said that around 90% of rich people have earned their wealth through real estate and consider it to be the best investment.

Let’s have a look at how real estate trophy assets compare to other assets for a better understanding of why that is:

1. Stocks vs Real Estate Trophy Asset

When you invest in stocks, you are buying a tiny piece of a company. Therefore, the stock market is not only more volatile, but it is also subject to the economic cycles and monetary policies, regulations, tax revisions, or even the changing interest rates fixed by a country's central bank.

While real estate is not as liquid as the stock market, the long-term cash flow that a trophy asset in real estate generates provides passive income and the promise of appreciation. Also, the cash garnered from the rent can most often cover the mortgage, insurance, property taxes, and repairs. 

2. Bonds vs Real Estate Trophy Asset

Bonds have a lower interest rate of return. When the bond matures the principal loan along with the interest rate agreed upon is paid back by bond issuers to the investor. A bond’s value is usually static and they do not build equity. Bond investments do not assign ownership to the issuing entity. 

Whereas in the case of a real estate trophy asset, along with the ownership of a physical asset the equity buildup is possible through property value increasing. Usually, a real estate trophy asset investment significantly outperforms bonds. Trophy asset investment can offer a consistent cash flow through rents and through appreciation in the long term and therefore are a better bet than bonds.

3. Gold vs Real Estate Trophy Asset

Investing in Gold is one of the oldest methods of investing, however, Gold is more volatile than real estate with the value of Gold changing almost every day that can lead to the value of your investment going down depending on the market conditions.

While both real estate and gold are safe investments, one of the biggest advantages real estate has over Gold is the fact that while 10-15% of Gold is sourced each year, the total quantity of land does not undergo any change. It is limited and cannot be increased or decreased with human efforts. Due to its limited availability, land is more scarce, has higher value and will most certainly appreciate in value.

4. Cash vs Real Estate Trophy Asset

The traditional method of building wealth by saving cash is often preferred by people who wish to play safe. However, this seemingly safe option of growing your money offers no protection from inflation. The main reason why you should invest your savings is to protect its purchasing power from being eroded by inflation and to grow your wealth.

Since the future is largely uncertain, it is wise to spread your money into assets that are a hedge against inflation such as a trophy asset in real estate. With real estate, you can expect to get a return that is better than the inflation rate under all the various economic situations. Because of this return-risk issue, investing in a trophy asset in real estate is a much better option than holding on to cash.

5. Bitcoin vs Real Estate Investment Trophy Asset

Looking at the dynamics of Bitcoin investment and its soaring popularity, Bitcoin is a terrific investment, however, the current market is highly unstable, is prone to high volatility and comes with risks such as hacking, operational glitches and fraud and theft activities. These risks as well as the fact that Bitcoin is an unregulated asset might cause it to be restricted and banned by governments.

Unlike Bitcoin, real estate is, has always been and will always be, a secure investment that is imperishable, cannot be stolen, and provides both short and long term returns.

"Real estate cannot be lost or stolen, nor can it be carried away. Purchased with common sense, paid for in full, and managed with reasonable care, it is about the safest investment in the world." 

Franklin D. Roosevelt

Final Thoughts

Summing it up, investment in real estate, especially the ones that are scarce and high in demand, offers long-term stability, are a store of value with no major sudden changes or unexpected value fluctuations. You have total control over your property as you have a tangible asset value in the form of a physical object. And since it is tangible it can also be utilized by renting out the property that generates passive income on a monthly or annual basis.

To top it off, some developers, such as SKHAI, offer professional rental management services such as property marketing, property housekeeping, guest hosting and property maintenance services that make property investment significantly easy and entirely hassle-free. Once you invest, our team does the rest!

With so many advantages that are starkly evident, it comes as no surprise why real estate trophy assets have helped build substantial wealth for smart investors.

If you are interested in property investment, contact our team at SKHAI and receive great deals on some of the most spectacular trophy properties at breathtaking beach locations in Thailand.