Latest news with #KarthikAthreya
Time of India
09-07-2025
- Business
- Time of India
Spotting The Trend! India's wealthy are quietly fueling a commercial real estate boom through AIFs
No, we're not talking about a flashy penthouse in Dubai. The real real estate action among India's wealthy is far more strategic—and closer to home. India's High-Net-Worth Individuals (HNIs) and Ultra-High-Net-Worth Individuals (UHNIs) are increasingly diversifying beyond traditional real estate avenues like residential apartments or luxury properties abroad. The big opportunity? by Taboola by Taboola Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like Cardiologist: The Best Method for a Flat Stomach After 50 (It's Genius!) Lulutox Undo Commercial real estate, and they're accessing it not by direct ownership, but through the Alternative Investment Fund (AIF) route. This shift is being driven by a mix of strong rental yields, growing institutional demand, and the desire for hassle-free, professionally managed investment exposure. 'That's one of the most significant trends we're seeing right now,' says Karthik Athreya, Director and Head of Strategy - Alternative Credit at Sundaram Alternates. 'HNIs and UHNIs are heavily leveraging the AIF route to get into commercial real estate. In fact, real estate is the single largest category for AIF investments , attracting roughly Rs73,903 crore just in the first nine months of FY25.' Live Events What makes this trend even more compelling is the broad base of asset classes under commercial real estate—spanning not just office spaces but also logistics, retail, and residential developments—offering investors diversification along with attractive risk-adjusted returns. Athreya points out that India's commercial property market has been on a strong upcycle, largely due to the GCC (Global Capability Centre) boom, with India now hosting over half of the world's GCCs. This has led to record-high leasing activity, particularly in metros, boosting demand for quality office space. 'With leasing at decadal highs, there's a massive demand for quality office space,' he explains. 'As an investor, one is looking at a regular income-generating asset, typically around an 8% rental yield, with an opportunity for 4–5% additional upside through annual appreciation and rent escalations.' Moreover, the AIF structure allows HNIs to avoid the operational burdens of directly owning commercial properties—something many high-net-worth investors find cumbersome. 'For a busy HNI, the AIF route is simply a 'no-brainer'. It helps them sidestep all the headaches of direct ownership—like managing tenants, upkeep, and exits,' adds Athreya. 'Instead, they get a slice of a professionally managed, diversified portfolio with target IRRs in the 15–18% range.' A Strategic Bet on Interest Cycles The timing of this uptick in HNI participation is also noteworthy. With interest rates peaking and the possibility of softening on the horizon, many investors see this as an ideal time to lock in higher yields on commercial real estate assets. 'There is a notable and growing interest among HNIs and UHNIs in India to participate in commercial real estate through AIFs, especially near the peak of the interest rate cycle—an ideal time to lock in high yields,' notes Sharad Mittal, Founder and CEO of Arnya RealEstates Fund Advisors. 'We've seen increased participation in funds dealing with pre-leased commercial assets, warehousing, and similar segments.' These segments are seen as stable, income-generating options with predictable cash flows—an attractive proposition at a time when market volatility remains a concern for direct equity investments. Regulatory Evolution Fueling Growth Although the adoption of real estate-focused AIFs has been gradual, regulatory tailwinds are beginning to accelerate the trend, making it easier for fund managers to structure and offer real estate strategies through the AIF framework. 'While the growth has been slow, it's gradually picking up as the regulator is now approving RE-focused AIFs with well-defined structures,' explains Vinayak Magotra, founding team member at Centricity WealthTech. According to Magotra, Category II AIFs now have better visibility and clarity, leading to increased confidence among both fund houses and investors. 'Currently, real estate represents around 5–6% of total AIF allocations. Additionally, REITs and InvITs are finding their way into HNI portfolios, offering similar benefits with better liquidity,' he adds. Indeed, even the listed REIT space has seen over Rs 22,000 crore from HNI and retail investors, demonstrating that real estate is becoming an essential component in long-term portfolios—whether via AIFs or REITs, a report from Sundaram Alternates Assets highlighted. Also Read: How India's wealthy are reimagining real estate investments, says Karthik Athreya The Bottom Line Whether it's income stability, professional management, or exposure to India's booming commercial infrastructure, HNIs and UHNIs are increasingly using the AIF route to access real estate in a smarter, more structured manner. AIFs provide access to commercial real estate opportunities that HNIs and UHNIs typically wouldn't be able to evaluate or manage independently—particularly in complex segments like structured credit and special situations. Also read: Mutual fund SIP inflows surge past Rs 27,000 crore for the first time in June 'The old model of buying an office or a shop and waiting it out is dying. Today's HNIs want scale, diversification, and cleaner execution,' Ramashrya Yadav, Founder & CEO, Integrow AMC, said. 'It's not about owning a floor in a tower anymore, but actually about being part of something bigger, with institutional controls,' he said. While residential stories and overseas investments may still dominate cocktail party chatter, the real wealth-building is happening behind the scenes, where strategic capital is quietly flowing into Indian commercial real estate—one AIF at a time.
Economic Times
08-07-2025
- Business
- Economic Times
AIFs, not luxury apartments: How India's wealthy are reimagining real estate investments, says Karthik Athreya
Indian high-net-worth individuals are increasingly favoring Alternative Investment Funds (AIFs) for real estate investments, moving away from direct ownership. This shift is driven by the booming commercial market and the desire for professionally managed portfolios. AIFs offer attractive yields and eliminate the hassles of property management, making them a preferred choice for wealthy investors seeking strategic real estate exposure. Tired of too many ads? Remove Ads Tired of too many ads? Remove Ads Tired of too many ads? Remove Ads India's high-net-worth individuals (HNIs) and ultra-HNIs are shifting gears when it comes to real estate investing. Gone are the days of managing individual apartments and hunting for wealthy investors are increasingly opting for structured, professionally managed exposure through Alternative Investment Funds (AIFs).According to Karthik Athreya, Director and Head of Strategy – Alternative Credit at Sundaram Alternates Assets, this marks one of the most significant trends in the private wealth real estate emerging as the largest category for AIF investments—drawing over Rs 73,000 crore in just the first nine months of FY25—HNIs are clearly embracing a smarter, hands-free approach to accessing commercial, residential, logistics, and data center explains what's driving this shift, the evolving role of family offices, and why AIFs—offering yields of 15–18%—are becoming the preferred route for India's wealthy to ride the real estate wave. Edited Excerpts -A) That's one of the most significant trends we're seeing right now. HNIs and UHNIs are heavily leveraging the AIF route to get into commercial real fact, real estate is the single largest category for AIF investments, attracting roughly 73,903 crores just in the first nine months of AIF investments are spread across real estate segments like commercial, residential, logistics and retail. The reasons for HNI / UHNIs participation in commercial real via AIFs are the commercial market itself is booming, largely driven by the GCC wave—India is now home to over half the world's Global Capability Centers . With leasing at decadal highs, there is massive demand for quality office as an investor, one is looking at a regular income generating asset, typically around an 8% rental yield with an opportunity to participate on the upside of another 4-5% through annual appreciation / rent for a busy HNI, the AIF route is simply a 'no-brainer'. It helps them sidestep all the headaches of direct ownership, like finding tenants, managing the property, dealing with day-to-day issues and finding a lucrative exit they get a slice of a diversified, professionally managed portfolio of top-tier assets with target IRRs in the 15-18% route opted by HNIs is through listed REITs, which offer the similar benefits albeit lower yield without compromising on liquidity. There're already nearly 22,000 crores of HNI and retail capital in in our opinion, HNIs are absolutely participating in the commercial real estate story in India through the AIF route.A) The shift is simple: HNIs want to be strategic investors, not active landlords. They're choosing AIFs for access to a diversified portfolio of top-tier deals without the day-to-day hassles of direct precisely the model we've perfected at Sundaram Alternates. Our real estate strategies are a testament to this trend's have consistently delivered ~15% IRRs for over seven years, which is why more than 700 HNIs have entrusted us with over ~2,600 crores. They're choosing a proven partner for smarter, professionally managed real estate exposure.A) HNIs are strategically adjusting their real estate allocations through AIFs, with the investment timeframe being a crucial investors prioritizing shorter cash-in cash-out cycles of 3-5 years, often seeking senior secured, self-amortizing structures with quarterly payouts—like those offered by Sundaram—the residential theme remains a preferred those with longer investment horizons are leaning towards the commercial and industrial spaces. These segments offer rewards primarily through stable rental yields and annual capital appreciation, which are often linked to prevailing interest rate cycles.A recent Anarock report for FY25 shows Industrial & Logistics (warehousing) dominating, capturing 48% of institutional funding. This surge, though influenced by large transactions, highlights its long-term potential driven by e-commerce and modern supply chains, offering stable leases and often lower development Office space is at 22% and residential at 15%. Interestingly, the 'Others' category, encompassing themes like data centers, has jumped fivefold to 15%. This signals aggressive allocation into these high-growth, emerging centers, while requiring longer horizons and specialized expertise, promise significant long-term appreciation and resilient income due to digital HNI allocation reflects a balance: shorter-term opportunities in traditional residential assets versus the compelling risk-return benefits and secular tailwinds of commercial, warehousing and data centers for longer-term growth.A) Family offices and private wealth are indeed evolving their real estate strategies significantly. We're observing a clear shift from the previously unregulated equity models to more structured financing, a trend accelerated by the increasing maturity of the Indian real estate finance landscape over the last substantial inflows into Alternative Investment Funds (AIFs), particularly within the debt sector, underscore this ahead, the next two to three years will likely see these sophisticated investors transitioning from purely debt-oriented platforms to embracing more mezzanine & equity-based strategies which shall aim at net returns of 18-21%.This includes a willingness to finance land acquisitions and take on back-ended premium exposures. This strategic pivot reflects a more nuanced approach to risk-reward in a regulated environment.(Disclaimer: Recommendations, suggestions, views, and opinions given by experts are their own. These do not represent the views of the Economic Times)
Time of India
08-07-2025
- Business
- Time of India
AIFs, not luxury apartments: How India's wealthy are reimagining real estate investments, says Karthik Athreya
India's high-net-worth individuals (HNIs) and ultra-HNIs are shifting gears when it comes to real estate investing. Gone are the days of managing individual apartments and hunting for tenants. Instead, wealthy investors are increasingly opting for structured, professionally managed exposure through Alternative Investment Funds (AIFs). According to Karthik Athreya, Director and Head of Strategy – Alternative Credit at Sundaram Alternates , this marks one of the most significant trends in the private wealth landscape. With real estate emerging as the largest category for AIF investments—drawing over Rs 73,000 crore in just the first nine months of FY25—HNIs are clearly embracing a smarter, hands-free approach to accessing commercial, residential, logistics, and data center opportunities. Athreya explains what's driving this shift, the evolving role of family offices, and why AIFs—offering yields of 15–18%—are becoming the preferred route for India's wealthy to ride the real estate wave. Edited Excerpts - Q) No, we are not talking about an apartment in Dubai. But, are HNIs and UHNIs taking part in the commercial real estate via the AIF route? A) That's one of the most significant trends we're seeing right now. HNIs and UHNIs are heavily leveraging the AIF route to get into commercial real estate. In fact, real estate is the single largest category for AIF investments, attracting roughly 73,903 crores just in the first nine months of FY25. These AIF investments are spread across real estate segments like commercial, residential, logistics and retail. The reasons for HNI / UHNIs participation in commercial real via AIFs are twofold. First, the commercial market itself is booming, largely driven by the GCC wave—India is now home to over half the world's Global Capability Centers . With leasing at decadal highs, there is massive demand for quality office space. Hence as an investor, one is looking at a regular income generating asset, typically around an 8% rental yield with an opportunity to participate on the upside of another 4-5% through annual appreciation / rent escalations. Second, for a busy HNI, the AIF route is simply a 'no-brainer'. It helps them sidestep all the headaches of direct ownership, like finding tenants, managing the property, dealing with day-to-day issues and finding a lucrative exit strategy. Instead, they get a slice of a diversified, professionally managed portfolio of top-tier assets with target IRRs in the 15-18% range. Another route opted by HNIs is through listed REITs, which offer the similar benefits albeit lower yield without compromising on liquidity. There're already nearly 22,000 crores of HNI and retail capital in REITs. Therefore, in our opinion, HNIs are absolutely participating in the commercial real estate story in India through the AIF route. Q) What's driving the shift among HNIs from direct real estate investments to structured exposure through AIFs? A) The shift is simple: HNIs want to be strategic investors, not active landlords. They're choosing AIFs for access to a diversified portfolio of top-tier deals without the day-to-day hassles of direct ownership. That's precisely the model we've perfected at Sundaram Alternates. Our real estate strategies are a testament to this trend's success. We have consistently delivered ~15% IRRs for over seven years, which is why more than 700 HNIs have entrusted us with over ~2,600 crores. They're choosing a proven partner for smarter, professionally managed real estate exposure. Q) Which real estate themes are HNIs allocating to most via AIFs — warehousing, data centers, rental-yielding commercial assets, or residential development? A) HNIs are strategically adjusting their real estate allocations through AIFs, with the investment timeframe being a crucial determinant. For investors prioritizing shorter cash-in cash-out cycles of 3-5 years, often seeking senior secured, self-amortizing structures with quarterly payouts—like those offered by Sundaram—the residential theme remains a preferred choice. Conversely, those with longer investment horizons are leaning towards the commercial and industrial spaces. These segments offer rewards primarily through stable rental yields and annual capital appreciation, which are often linked to prevailing interest rate cycles. A recent Anarock report for FY25 shows Industrial & Logistics (warehousing) dominating, capturing 48% of institutional funding. This surge, though influenced by large transactions, highlights its long-term potential driven by e-commerce and modern supply chains, offering stable leases and often lower development risk. Conversely, Office space is at 22% and residential at 15%. Interestingly, the 'Others' category, encompassing themes like data centers, has jumped fivefold to 15%. This signals aggressive allocation into these high-growth, emerging sectors. Data centers, while requiring longer horizons and specialized expertise, promise significant long-term appreciation and resilient income due to digital demand. Ultimately, HNI allocation reflects a balance: shorter-term opportunities in traditional residential assets versus the compelling risk-return benefits and secular tailwinds of commercial, warehousing and data centers for longer-term growth. Q) How do you see family offices and private wealth desks evolving their real estate strategies over the next 2–3 years? A) Family offices and private wealth are indeed evolving their real estate strategies significantly. We're observing a clear shift from the previously unregulated equity models to more structured financing, a trend accelerated by the increasing maturity of the Indian real estate finance landscape over the last decade. The substantial inflows into Alternative Investment Funds (AIFs), particularly within the debt sector, underscore this maturation. Looking ahead, the next two to three years will likely see these sophisticated investors transitioning from purely debt-oriented platforms to embracing more mezzanine & equity-based strategies which shall aim at net returns of 18-21%. This includes a willingness to finance land acquisitions and take on back-ended premium exposures. This strategic pivot reflects a more nuanced approach to risk-reward in a regulated environment.
