Planning to Invest: Consider these 5 alternate assets to put your money

By: Ankit Kansal, Founder & MD, Axon Developers

2022 has ended on a high note for Indian real estate. It was an year, the industry was waiting for a long. Sales volume jumped steeply and existing inventory declined in most of the major markets in the country. As the stock and bond market is in a tailspin and the hoopla around crypto has muted, real estate is also witnessing increased investor vigor.

Investors will continue to pivot to the real estate market in 2023 as well in big volumes lured by attractive rental income & appreciation potential alongside the tangible nature of the asset.

Meanwhile, real estate investments won’t just be limited to owning a home or Grade-A office stocks in the CBDs. There are emerging asset classes, which are steadily becoming very popular. Here is the list of 5 alternative assets that one can think of investing in 2023:

Vacation Homes: The second & vacation home market in India is going from strength to strength. Today owning a home is not just a fad amongst the super-rich. Rather the vast affluent class comprising corporates, entrepreneurs, artists & creative professionals, tech entrepreneurs, and professional service providers, are now actively investing in the category. There are plenty of options available starting from Rs 1- 1.5 Crores in the picturesque hill stations, sea beaches, tranquil western ghats, etc.

Not just a great avenue to spend time with friends & family, second homes are also preferred for homestays by tourists rather than regular hotels. If a property is marketed properly, they can give rental up to ~ 7% annually.

Warehouses & Logistics Real Estate: Post-pandemic, warehouse & logistics have become one of the fastest-growing commercial real estate categories in India, steered by expansion in digital retail & e-commerce, 3^rd party logistics, food delivery services, etc. The recent trends of hyper-localized & super-fast e-commerce delivery (10-30 mins) are further renewing the demand for warehouses, cold storage, etc. India’s growing PLI incentives to boost indigenous manufacturing will also drive the warehousing demand.

There are other benefits associated with warehouses such as lower cost of acquisition and extended lease periods (a typical warehouse lease will last for 9-15 years compared to 3-5 years in offices and retail shops.)

Nature resorts: The Indian hospitality sector has finally recovered with footfall soaring. Alongside 5-star hotels and luxury resorts, there is a growing appetite for experiential tourism, feeding into the demand for concept resorts, nature resorts, eco-hotels, Ayurvedic lodges, etc. Many tourists who have already visited a place, now want to do more than regular site visits. They now wish to learn more about local cultures, recharge & rejuvenate with massage & therapy sessions, go out for adventure sports such as trekking & hiking, etc. This will make the nature tourism segment a hot cake in 2023.

SCOs: In 2023, we might see explosive growth in SCOs. Hitherto, the concept is popular in Gurgaon (and some parts of Chandigarh) with around ~ 75 acres of property under SCO, as per the research by 360 Realtors. Soon other cities will embrace the idea. SCOs come with a very high appreciation potential of close to ~ 25% annually, which can help investors double down on their investments in 4 years. Like other commercial properties, the rental yield is also close to 6-8%.

Ethnic eateries: Ethnic eateries, heritage food, and traditional cuisine-based takeaways hold a very small share in India’s expansive F&B industry that has close to 4 million units (organized industry consists of around 30-35% market share.) However, there is a growing propensity to connect with local flavors, cuisines, and food items. Fresh, holistic, sumptuous, and whole meals are no more just lifestyle fads but the reality of the present times. As the market is transforming, 2023 might be the time to put your money into ethnic restaurants, cloud kitchens, takeaways, etc.