The real estate asset class is a strong global wealth creator. It accounts for over 23% global HNI’s investment share, but is under-tapped in India at just 10%. Real estate investments offer risk-adjusted returns with low volatility and have been attracting the attention of high-net-worth investors (HNIs).
Indian Residential Real Estate as a favoured asset class
Real estate investments help investors diversify their investment portfolio. Real estate is often viewed as a hedge against inflation and provides an alternative to traditional investment options such as equity and gold. Real estate investments are risk-mitigated, insulated from volatile movements of the stock market, and have superior cashflow generation potential.
Growth of Indian Real Estate Supported by Key Macro-Economic Indicators
The Indian real estate sector is experiencing a significant boost from several key macro-economic factors, and is expected to grow to 1 trillion dollars by 2030. The sector’s growth has long-term support from India's rapid urbanization, sustained job formation and steady GDP growth.
Trends and Market Movements in the Indian Residential Real Estate Segment
India’s residential real estate market experienced stellar double-digit growth in 2022 (India’s top eight property markets witnessed sales of over 3.12 lakh units in 2022, resulting in high 34% year-on-year growth).
The pandemic has also led to a shift in preferences, with a surge in demand for larger homes and affordable housing. Property prices in the Indian residential real estate sector have been rising steadily, with major cities witnessing a growth of 2-5% in the last year, and the trend is expected to continue.
Real Estate Focussed AIFs: Regulated Investment Vehicle for HNI’s
Alternative Investment Funds (AIFs) are becoming increasingly popular among High Net Worth Individuals (HNIs) in India. AIFs are regulated by SEBI, and offer transparency and professional management. They also offer diverse investment themes and tax-friendly structures, enabling HNI participation in the promising growth potential of the Indian real estate market.
In conclusion, Indian residential real estate offers numerous advantages as an asset class, including the potential for risk-adjusted attractive returns, portfolio diversification, and cashflow generation. AIFs are a SEBI regulated investment vehicle with an efficient and hassle-free investor experience, making it an attractive option for HNIs looking to diversify their investment portfolios.
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