What motivates Indians to seek investment opportunities in global real estate? Are the investment prospects within India insufficient?

In an increasingly interconnected and dynamic global economy, the landscape of commercial real estate (CRE) investment has transcended traditional boundaries, paving the way for a new era of international opportunity. As investors seek to maximize returns and mitigate risks, diversifying commercial real estate investments across global markets has emerged as a strategic imperative. Many investment platforms are expanding their reach into markets like the UK, USA, and Europe. The reason for this expansion is the attractive returns they can expect in these countries, as the yield is measured in strong currencies providing greater stability and growth potential. Additionally, foreign markets offer advantages such as a strong tenant profile with longer lock-in periods, ensuring a steady rental income. Furthermore, developed markets come with reliable infrastructure and well-established regulations, reducing investment risks and increasing potential returns.

Commercial real estate is one of the most lucrative asset classes to invest in for the long term. It is one of the few hybrid instruments with characteristics of both debt and equity that also provides safety of capital. A few simple principles can be applied by any investor to ensure that he/she gets the maximum value out of this asset class while minimising risk.

Commercial Real Estate (CRE) has been a popular asset class for HNIs and institutional investors around the world. CRE provides monthly cash yields linked to an underlying lease along with a capital appreciation kicker that can together lead to returns in the high teens for investors.

Many of you have asked us why we have slowed down our listings and investments in India over the past few months. I thought I would write to you directly to explain our strategy and why we think this is not the best time to invest in office assets in the country.

While trying to make a decision on asset allocation, this is one of the most common questions which every investor would have asked their friends, family, advisors and most importantly themselves, in order to achieve long term capital appreciation. Hence, I thought it may be interesting to look at what historical returns can teach us about both of the asset classes.

Since the onset of second wave of Covid-19, a lot of questions are being raised about the state of office real estate. While I understand the reason why such questions are being raised, it is also important to look at the ground realities. Hence, when Embassy Office Park REIT (Embassy REIT) declared its Apr-Jun ’21 results, I thought it may be a good idea to look at some publicly available facts stated in the results in order to dispel some of the fears about the impact of Covid-19 on the office markets.

As social distancing becomes a norm worldwide, the impact within the real estate sector has been varied.

Commercial real estate (CRE) has been one of the best performing asset classes in the country in terms of yields and capital appreciation.

Commercial real estate has always remained an attractive asset class for high yield investment. Compared to other yield products like fixed deposits, debt funds, AA/AAA rated paper, investing in CRE provides various additional benefits especially to the NRI investor.

Despite the economic slowdown and pandemic, warehousing remained largely resilient recording growth of 44% CAGR in last three years," said Shishir Baijal, CMD, Knight Frank India.

As I write this, the novel Coronavirus has infected over 380,000 people with the death toll at close to 17,000. As the CEO and Co-founder of a real estate investment platform, I often get asked the question - How does this affect real estate investing?

Investors can earn much higher returns that are inflation-adjusted in commercial real estate compared to fixed deposits and other debt mutual funds.

Traditionally, HNIs have relied on a mix of debt and equity investments in order to plan their retirement and provide funds for their children.

While one might think that the universe of investible asset classes available today are vast and offer a variety of options to investors, in essence, the final choice comes down to a surprisingly few options.

A commercial asset investment would mean an investment in a standalone commercial office building or part of a business park where the tenant leases an office space. A retail investment would mean investing in a mall or high street where the tenant runs a retail store, restaurant or cinema.

More than 35% of investors on the PropShare platform are non-resident Indians. Our NRI investors come from countries as diverse as the Middle East, US, Europe, Japan, Hong Kong Singapore, Malaysia, Australia, Africa among others.

Mutual fund houses have been aggressively pushing Fixed Maturity Plans (FMPs) to layman investors promising safety of capital and predictable returns. What can go wrong with these supposedly AA or AAA rated entities?

Why does the RBI increase rates? To answer it very simply, it is done to suck out liquidity in the system. A rate increase disincentives borrowers to borrow more, reducing money supply which among other things helps in controlling inflation.

Non Resident Indians (NRI) who are interested in investing in Property Share’s commercial property listings can do so through their Non Resident Rupee (NRE) or Non Resident Ordinary Rupee (NRO) accounts. However, as per RBI mandate, rent/dividends can be distributed only to NRO accounts.

Game changers, disruptors, early adopters and digital pioneers – these are some of the epithets that Indian millennials sport with pride, and why not! They have been championing the cause of a more technology-driven India, setting the ground rules for the ongoing digital transformation.

Property Share maximizes returns by saving on dividend distribution tax and stamp duty, incurring lower audit and filing related expenses while simultaneously providing investors with a highly liquid investment product.

Property Share is eyeing expansion into multiple geographies, countries and asset classes including commercial, residential, retail, industrial and hospitality. The platform aims to become India's largest and alternative investment platform, with its presence in every Tier I city in India within two years.

All rent generating real estate assets are subject to rental income tax. A standard deduction of 30% on the total rental revenue is allowed followed by a 30.9% tax on the taxable value.

The blockchain is a distributed digital, chronological, encrypted and time stamped ledger that contains a digital record of transactions. It was initially developed to keep track of the amount of bitcoins in circulation but its usefulness has now extended far beyond cryptocurrencies.

If you follow the basic principles of long term investing, you can earn much higher returns compared to fixed deposits and other debt mutual funds. But there are some things to keep in mind while becoming a successful commercial property investor

Commercial leases are very different from residential leases, which tend to be structured with standard 11-month tenure and an escalation at the end of the term. In this blog, we will understand how commercial leases work and how an investor in commercial property should analyse them.

While fixed deposit rates have fallen to historic lows of 5-6 percent penal 30 percent tax rate, the volatility of the stock market has seen many investors burn their fingers. Debt mutual funds have returned 10-11 percent but there is virtually no upside. With inflation at 5 percent, the real returns to investors after tax are negligible.

Disrupting how common people invest in real estate, Property Share is India’s first and leading fractional property ownership platform. It enables NRIs and Indian investors to partially invest in Grade A commercial properties rented to AAA multinational tenants with relatively smaller investment sizes.

While tech has entered every aspect of our lives, one area where it is yet to make a big impact is a real estate – a sector often associated with grubby developers, opaque contracts, and smooth talking hustlers.

How does investment in commercial real estate compare to other investment avenues? In this blog I am going to address that question by analyzing returns from various investment options.

Over 8 years of investing at Blackstone (world’s largest real estate fund) I visited hundreds of properties throughout the country met the CEOs of all the top developers and invested $1 billion in creating what is now the largest commercial portfolio in India.

Mathematically, an investor should take a loan so long as he feels the Asset will return more than the interest on the loan. If the asset returns more than the interest, it will always be more profitable to take a loan.