Real Estate as Asset Class India
Real estate has historically constituted the largest single asset class in Indian household balance sheets, driven by cultural preference, leverage availability through home loans, rental yields, and long-held beliefs about property being a reliable store of value, though REITs and fractional ownership platforms now offer alternatives with better liquidity.
Surveys of Indian household balance sheets consistently show that real estate accounted for 50 to 60 percent of total household wealth, far exceeding allocations to financial assets such as equity, mutual funds, or fixed income. This reflected historical experience: property in major Indian cities appreciated substantially in rupee terms through the 1980s, 1990s, and 2000s, and property ownership was culturally conflated with security, social status, and life success.
The financial mechanics of residential property investment involved significant leverage through home loans, tax benefits on principal repayment under Section 80C and on interest under Section 24(b), and the optionality of both self-use and rental income. A buyer using 20 percent equity and 80 percent borrowed funds amplified their return on equity if property prices rose, though the same leverage worked adversely if prices fell or rental yields failed to cover EMI costs.
However, the period from 2013 to 2020 was difficult for residential real estate. After a decade of price appreciation, multiple cities saw prices stagnate or fall in real terms. Developer defaults and project delays — exemplified by cases like Jaypee Infratech and Amrapali — trapped buyers in under-construction projects for years without delivery. RERA's implementation from 2017 began improving transparency and accountability but took years to gain effective enforcement across states.
Commercial real estate, especially grade-A office space in Bengaluru, Mumbai, and Hyderabad, performed better as India's IT and global capability centre boom drove stable rental income. The listing of Embassy Office Parks REIT in 2019 provided retail investors their first liquid, low-minimum route to participate in institutional commercial real estate income.
Fractional ownership platforms emerged in the early 2020s, allowing investors to own a fraction of a specific commercial property alongside other investors, with SEBI later issuing a regulatory framework for Small and Medium REITs to formalise this segment. The diversification of real estate investment instruments — direct property, REITs, InvITs, and fractional platforms — expanded the options available to investors seeking real estate exposure without the illiquidity and high transaction costs of direct residential property.