Real estate remains most preferred asset class for investment: Report

According to a survey by FICCI and Anarock, 59% of respondents across 14 cities favoured real estate as the most preferred asset class

Real estate is still the most preferred asset class for investment for Indians, with apartments mainly being the chosen property type, according to a survey by the Federation of Indian Chambers of Commerce & Industry (FICCI) and Anarock.

The survey revealed that 59 per cent of the 7,615 respondents across 14 cities in the age group of 24-78 years favoured real estate as the most preferred asset class.

Further, 67 per cent of buyers seek property for end use, while 33 per cent to invest, the survey stated.

Thirty-five per cent of the survey respondents preferred the Rs 45 to 90 lakh budget segment, while 28 per cent preferred homes priced between Rs 90 lakh and 1.5 crore. Over 53 per cent of homebuyers admitted that they are dissatisfied with current affordable housing options, citing issues with location, construction quality, and unit sizes.

“India’s economic growth is driving rapid expansion in the real estate sector, with the residential market projected to reach $1.04 trillion by 2029, growing at a 25.6 per cent CAGR. This growth is fuelled by rising demand for ultra-luxury properties and significant investments,” Raj Menda, chairman, FICCI Committee on Urban Development and Real Estate & Chairman of the Supervisory Board, RMZ Corporation, stated.

Apartments turned out to be the most preferred property type (58 per cent), but residential plots were observed to be gaining popularity, particularly in southern cities.

Further, 57 per cent of the investors stated that they would buy property to earn rental income, driven by surging rental rates in cities.

Pramod Rao, executive director, SEBI, said, “Investor confidence is vital for the industry's long-term success, and SEBI’s focus on transparency and governance has been key in building this trust.”

Rao emphasised that strong compliance and better disclosures will be crucial in attracting institutional investments. He also highlighted SEBI’s initiatives, including a single dashboard data bank to streamline processes and efforts to convert real estate investments into tradable financial instruments, boosting liquidity and accessibility.

Huge opportunity for government to monetise its own assets: Rao

Rao further stated that there’s a huge opportunity for the government to monetise its own assets, whether it’s a state government or even a municipal corporation. “Wherever there’s a revenue-generating asset, to our mind, that can be housed in an Invit or a Reit. It’s been successfully done by NHAI for road assets. To my mind, what more can we unleash without necessarily disturbing fiscal prudence is monetisation by the government,” he said.

Rao highlighted that more than 50 per cent of Indians’ wealth is concentrated in the real estate sector. Globally, the sector is the largest asset class with a value of more than $300 trillion.

He quoted that the assets under management (AUM) of 30 operational Indian real estate investment trusts (Reits) and infrastructure investment trusts (Invits) are about Rs 6.5 trillion as of March 31, 2024. Moreover, 10 to 15 per cent of the country’s Grade-A space is held by Reits focused on commercial real estate, he added.