Real Estate (RE) is a critical asset class, both from an economic and individual point of view. At the economy level, RE sector contributes ~7%(1) to India’s GDP and is a major source of mass employment. At an individual level, physical assets (primarily real estate and gold) account for 50%+ of house-hold savings in India. For global institutional investors also, India has been a major focus. These investors invested ~US$40Bn over the last 6 years. And the interest remains strong despite COVID. In 1H2021, the sector received ~US$2.9Bn(2) of investment, more than 2x of 1H2020.
Most high net-worth families’ exposure to real estate is in the physical form i.e. directly owning the assets. Many a times assets are legacy owned and not really being managed by a professional team. Also, asset management of physical real estate could become cumbersome. Therefore, despite the strong fundamentals of the underlying sector (as evidenced by significant institutional interest), the investment experience of individuals/families had been mixed.
