By Prudhvi Reddy, Founder and Chief Executive Officer, Assetmonk
In the fast-paced and ever-evolving world of finance, real estate shines as an enduring asset class, consistently demonstrating its potential to captivate modern investors with exciting opportunities. While it may have presented challenges in the past, this age-old investment has undergone a remarkable transformation, embracing a new-age perspective that unlocks unprecedented growth and diversification. It now offers innovative avenues such as fixed-income products and fractional ownership, all within a structured framework of Alternative Investments.
Within the dynamic landscape of Indian investments, the surge in popularity and demand for alternative investments serves as a testament to the pursuit of superior returns and enhanced portfolio diversification. As traditional investment options reveal limitations in delivering substantial returns, seasoned investors are increasingly turning to alternative assets to bolster their portfolios and optimize gains. Allocating a prudent 10% to 15% of one’s investment portfolio to alternative products is now considered a strategic move towards long-term prosperity and wealth generation.
Amidst the realm of alternative investments, new-age real estate strategies are on a continuous ascent. In addition to traditional residential property transactions, we witness a burgeoning demand for innovative commercial spaces such as co-living, co-working, senior living, office space and warehouses. This surge is driving the emergence of contemporary investment products like fractional ownership investments, Real Estate Investment Trusts (REITs), and Alternative Investment Funds (AIFs).
Additionally, the millennial generation’s increasing appetite for digital platforms propels the advancement of new-age real estate investments. Empowered by innovative prop-tech/wealth tech platforms, which provide personalization, relationship management, transparency, security, user-friendly interfaces, and real-time data, these young investors can now venture into previously inaccessible asset classes, catalysing a revolution in the investment landscape.
Advantages for Retail Investors:
The allure of alternative real estate investments lies in their ability to cater to a diverse range of investors, each with varying risk appetites and financial objectives. These once-exclusive investments, primarily accessible to institutional players, are now available to retail investors in various sizes and structures. As investors seek to fortify their portfolios with a well-balanced mix of assets, the concept of diversification takes centre stage in mitigating risk exposure.
The ideal investor for alternative real estate investments is forward-thinking, well-informed, open to innovation, and driven to build a resilient investment portfolio that can withstand changing economic climates.
Investor Benefits For Long-Term Wealth Growth:
A key reason why strategic investors opt for real estate investments is their potential to provide long-term wealth growth while mitigating risks linked to traditional asset classes. Advantages include:
- Diversification: Alternative real estate investments enable investors to expand their portfolios beyond traditional stocks and bonds, diminishing overall risk and serving as a hedge against market volatility.
- Steady Income Generation: Various alternative real estate assets, including rental properties, fixed-income products, and real estate fractional ownership projects, deliver a consistent flow of passive income through rental yields or dividends.
- Potential for Capital Appreciation: Specific alternative real estate assets, such as commercial properties in emerging neighbourhoods, hold substantial potential for significant capital appreciation over time, bolstering long-term wealth growth.
- Inflation Hedge: Real estate investments have a historical track record of serving as a natural hedge against inflation, as property values and rental income typically rise in tandem with inflationary pressures, safeguarding investors’ purchasing power.
In conclusion, real estate investment remains invaluable in the ever-changing financial landscape. The surge in alternative real estate investments is propelled by technological advancements, volatile financial markets, increased accessibility, and heightened awareness of their benefits. Looking ahead, the potential of alternative real estate investments remains promising, as innovative digital platforms reshape the industry. For those seeking to secure their financial future, exploring alternative real estate investments presents a confident path to navigate the evolving investment landscape.
Also Read: Indian real estate poised for growth with potential access to untappeddomestic institutional capital
