Top 5 Real Estate Sectors For Investment in India

Top 5 Real Estate Sectors For Investment in India

• As we slowly step into 2024, The Indian real estate landscape has evolved drastically. While traditional real estate investments are still on the rise, alternative real estate investment options are quickly gaining prominence by offering investors diverse investment opportunities and also catering to their changing demands and preferences. 
• Talking about the industry as a whole, business is booming. In fact, the country’s real estate industry which was valued at $200 billion in 2021 is expected to reach a towering height of $1 trillion by 2030.
• In fact, some investors can already hear the sound of cash registers jingling, as this indicates significant growth potential for the upcoming year. 
• In this article, we’ll dive into the real estate trends and look at the Top 5 Real Estate Sectors ideal for investment in 2024. 

1. Alternative Investment: Fractional Ownership Is A Game Changer 

• Fractional ownership of commercial property allows multiple investors to collectively own a property, and divide the costs and profits as per their ownership share. 
• Also known as joint or co-ownership of property, this innovative investment model has gained a lot of traction in the past few years, putting high end large commercial properties in the hands of investors which were earlier out of their grasp, by providing them with the option of shared ownership. 
• A trophy commercial property is offered for investment by a Fractional Ownership Platform (FOP), and a number of investors pool in their money to buy a share of the property. Then, after the FOP takes a small cut for maintenance and running the property, all the rental returns from the property are shared among the co-owners of the property. 
• As per a recent report by TruBoard partners, the fractional ownership market in India jumped from Rs 1500 crore in 2019 to about Rs 4000 crore in 2023.
• One of the reasons for the growing popularity of fractional ownership models is its flexibility and accessibility. High value commercial markets which were earlier out of reach for a wide range of investors are now more accessible to them, thus making the real estate market more inclusive and diverse. A lower capital outlay is required for entry, thus mitigating the risks associated with a single large sum investment. 
• Assetmonk, as an alternative investment platform in India, offers a diverse range of properties in fractional or co-ownership models, with a minimum entry amount of Rs 10 lakhs, and a guaranteed high Internal Rate of Return (IRR). 

2. Residential Real Estate Is Roaring As Always 

• India’s heart and soul lays with its middle class income families. And as the economy shows steady growth, demand for residential properties is sky high. This is also a result of growing urbanisation, as a large number of people have migrated to metro cities for jobs and employment opportunities. 
• However this demand is not only fuelled by the middle class: The completion of many residential development projects by ambitious property builders has improved infrastructure, contributing to the increased demand even in tier-2 and tier-3 cities. 
• As per a report from ANAROCK Research, the first half of 2023 saw unprecedented house sales of around 2.29 lakh units across the top 7 cities. 
• And get this: despite rising interest rates and house costs, this represents more than 63% of total sales in 2022! The demand for residential homes in India is clearly increasing, and astute investors are taking notes.

3. Co-Working And Shared Living Spaces On The Rise 

• The demand for co-working and flexible workspaces has been on the surge post-pandemic, as expected due to the changing dynamics of the global workforce and the rise of hybrid work models. 
• Most companies nowadays don’t want to buy a fixed office space, they need co-working spaces that offer high adaptability and flexibility to changing workloads and situations. 
• The hybrid model does require some space to foster a creative and collaborative company culture, and shared workspaces have emerged as the perfect solution for these dynamic problems, attracting startups, established businesses and freelancers alike. 
• Based on a recent Mordor intelligence report, the market for commercial co-working spaces is already worth an astonishing USD 1.78 billion, with a projected growth rate of over 7% in the years to come.
• Investors have noticed the potential in co-working spaces and shared living spaces. These are not just about providing desks or a place to work or live, they are vibrant centres of communication that facilitate networking and collaboration among their residents. 

4. Commercial Subleasing: A New Avenue For Investment 

• Many investors have looked to capitalise on the hidden value that commercial subleasing provides in the real estate industry. 
• Commercial subleasing involves renting a property from a landlord as a primary tenant, and then sub-leasing it to other parties, who will be known as the sub tenants or sub-lessees. The sub-lessees get benefits not generally seen in traditional lease agreements, such as a shorter lease commitment, flexible office solutions, sub tenant rights, and so on. Meanwhile the main tenant can optimise space and generate additional revenue on the property. 
• Investors are looking to capitalize on the demand for shared office spaces and other commercial facilities by entering into sub-leasing arrangements with businesses in this current evolving work culture. 

5. Growing Momentum Of The Senior Living Sector 

• There are more than a 100+ million senior citizens in India. As per a new JLL report, the expected increase in the population share of senior citizens will increase from 10% to 20% within the next few decades. 
• Columbia Pacific Communities, Vedaanta Group, Ashiana Group, Paranjape (Athashri), Primus, Antara, Advaitt, Covai Care, Prarambh Buildcon, and Saket Group are among the top ten senior living operators, with a combined market share of more than 50%. The fact that India is still in its early stages of development gives a considerable chance for progress.
• The general shift towards nuclear families, increased mobility for career opportunities, rise in senior care services, have all contributed towards the growing acceptance and popularity for bespoke senior living communities. 

Assetmonk: Empowering Alternative Investment

Assetmonk distinguishes itself as a pioneering firm in the field of alternative investment that recognises the changing demands of investors. Specialising in delivering commercial real estate possibilities and properties, Assetmonk provides a variety of investment options suited for a variety of tastes.

Assetmonk’s dedication to maximising profits is obvious in its focus on commercial real estate investment, fractional ownership, and other models which have potential for high Internal Rate of Return (IRR) and Return on Investment (ROI). 

The firm emphasises on strategy and due diligence, and always looks for value in the real estate sector.

Read More 

Investing in Commercial Real Estate

Fractional Ownership In Commercial Real Estate

FAQs

What Is Fractional Ownership? 

Multiple investors pool their resources to co-own a valuable property under the concept of fractional ownership. Instead of purchasing the entire property, each investor purchases a fraction or share of it.

Best Time To Invest In Commercial Real Estate? 

One of the most profitable asset sectors to invest in over the long run is commercial real estate. Typically, investing in Commercial real estate (CRE) is viewed as a long-term strategy.

Are Co-working spaces on the rise? 

The surge in demand for co-working and shared living spaces is post-pandemic, reflecting the evolving global workforce’s need for flexible workspaces and the rise of hybrid work models.

How is residential real estate demand in India changing, and who is driving it?

Demand for residential properties in India is rising, fueled by steady middle-class growth, urbanisation, and the completion of ambitious development projects even in tier-2 and tier-3 cities.