As an investor marketing company, we have helped different real estate companies to raise more than $120mn for their alternative investment products, fractional ownership, opportunity zone, long term co-living investment and distressed fund in US & India. In this article I would like to cover few real estate alternative investment platforms in India, which will help you to explore while building your portfolio.
Do Note: This is not an Investment Advice
What is an Alternative Investment?
An alternative investment is an asset class or investment strategy that falls outside the traditional categories of stocks, bonds, and cash. These investments are considered alternative because they do not fit the conventional mold of mainstream investments and often have unique characteristics, risk-return profiles, and liquidity features. Alternative investments are typically chosen by investors seeking to diversify their portfolios and potentially achieve higher returns.
Some common examples of alternative investments include:
Private Equity: Investing in private companies or taking ownership stakes in non-publicly traded businesses.
Hedge Funds: Investment funds that employ various strategies, including long and short positions, derivatives, and leverage, to potentially generate returns regardless of market conditions.
Real Estate: Investing in physical properties such as residential or commercial real estate, as well as real estate investment trusts (REITs) that provide exposure to real estate markets.
Commodities: Investing in physical goods like gold, oil, or agricultural products, often through futures contracts or commodity-focused funds.
Venture Capital: Providing funding to startups and early-stage companies in exchange for equity ownership.
Private Debt: Investing in non-publicly traded debt instruments, such as private loans, mezzanine debt, or distressed debt.
Collectibles: Acquiring and holding valuable items like art, vintage cars, rare coins, or rare stamps as investments.
Infrastructure: Investing in critical infrastructure projects like toll roads, bridges, airports, or utilities.
Cryptocurrencies: Digital currencies like Bitcoin and Ethereum have gained popularity as alternative investments due to their potential for significant price volatility and speculative appeal.
Structured Products: Complex financial instruments designed to offer exposure to various asset classes or investment strategies.
Understanding Real Estate Alternative Investment
“Real estate alternative investments” refers to non-traditional ways of investing in real estate beyond the typical methods of directly purchasing physical properties. These alternative investment approaches provide investors with exposure to the real estate market while offering different structures, risk profiles, and investment strategies. Real estate alternative investments are often chosen by investors seeking diversification, potentially higher returns, or specific investment objectives that do not involve property ownership.
Some examples of real estate alternative investments include:
1) Real Estate Funds:
These are professionally managed investment funds that invest in various real estate assets or projects. They can be open-end (continuous investment and redemption) or closed-end (fixed capital and limited redemption periods) and offer exposure to a diversified real estate portfolio.
These real estate funds offer 3% quarterly coupon, and the rest is paid after maturity. Let’s take an example of an Rs. 10lacs investment to understand this with a tenure of 36 months & fixed IRR of 17%, below is the illustration
Most of the real estate alternate investment platforms offers this kind of coupon model which influences decision of the investors.
2) Real Estate Investment Trusts (REITs):
These are publicly traded companies or trusts that own and manage income-producing real estate assets, such as commercial properties, apartment complexes, or hotels. REITs offer investors the opportunity to invest in real estate without directly owning properties. They typically provide regular income through dividends.
3) Real Estate Crowdfunding:
Platforms allow investors to pool their funds to invest in specific real estate projects, such as residential or commercial developments. Investors can access a diversified portfolio of real estate assets with relatively small investments.
4) Real Estate Limited Partnerships (RELPs):
RELPs are investment vehicles where investors become limited partners in a real estate venture, with a general partner managing the investment. Limited partners provide capital, while the general partner oversees the property’s acquisition, management, and potential sale.
5) Real Estate Notes and Mortgages:
Investing in real estate debt, such as purchasing mortgage notes or participating in private lending, allows investors to earn interest income from real estate transactions.
6) Real Estate Exchange-Traded Funds (ETFs):
These funds trade on stock exchanges and aim to replicate the performance of a real estate-related index, providing exposure to a basket of real estate-related assets.
7) Real Estate Derivatives:
Sophisticated investors may use real estate derivatives, such as futures or options contracts, to speculate on or hedge against changes in real estate prices or interest rates.
8) Real Estate Hedge Funds:
Some hedge funds specialize in real estate investments and employ various strategies to generate returns from the real estate market, including long and short positions, leverage, and arbitrage.
9) Real Estate Private Equity:
Investing in private equity funds that focus on real estate allows investors to participate in the acquisition, development, and management of real estate assets.
Real Estate Alternate Investment Platforms
1. AssetMonk
Assetmonk is a new age alternative realty investment platform. It provides high potential real estate investment opportunities with smaller ticket sizes via fractional ownership
Track Record
AUM – 260Crs
Avg IRR – 14 to 18%
Investor Geographies – 16+
Investor Exits – 5+
2. Strata
Strata is a real estate wealth creation platform that utilizes data-driven insights and in-depth experience to help investors make safe, calculated investment choices with the aim of building a stable, long-term investment portfolio.
Track Record
AUM – 920Crs
Avg IRR – 12 to 15%
Investor – 40,000
3. Property Share
Property Share is India’s 1st and largest tech-enabled commercial property listing platform, it aims to democratise real estate investing for ordinary investors by providing institutional quality analysis, asset management and liquidity at much lower investment thresholds.
Track Record
Properties Funded – 1,320 Crs
Avg IRR – 15 to 18%
Investor – 170,000
4. Hbits
Hbits is fractional ownership platform, their goal is to become a global market for real estate by bringing this lucrative asset class to the everyday investors.
Track Record
AUM – 3000 Cr
Avg IRR – 13 to 18%
Investor – 50,000
Conclusion
Real estate alternative investments can provide diversification benefits, potentially higher returns, and exposure to the real estate market without the responsibilities and risks associated with property ownership. However, they may also come with their own set of risks, including market fluctuations, liquidity constraints, and management fees. As with any investment, it’s essential for investors to conduct thorough research and consider their financial goals and risk tolerance when exploring real estate alternative investments. Consulting with a financial advisor or real estate investment professional can also be beneficial.
