For big investors, there’s no equity in real estate

MUMBAI: With the economy going slow and real estate projects running years behind delivery dates, middle-level corporate executives are moving away from property

MUMBAI: With the economy going slow and real estate projects running years behind delivery dates, middle-level corporate executives are moving away from property en masse.

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Executives from companies such as TCS and Cisco, with investible surpluses of ₹15-20 lakh annually, traditionally invest in property, but are now turning to the equity markets, and have been enjoying returns in the region of 18% to 25%, according to investment managers.

“I had invested in three real estate projects in the NCR (national capital region) over the years. Two of them are running four-five years beyond promised date. The third one is completed, but I am not able to sell,” said Delhi-based Vikas Sharma, who works with Cisco, a global IT company. “Over the past year, I have invested in PMS (portfolio management service) and have been getting good returns,” he said.

Sharma invests about ₹12-15 lakh annually.

Under PMS, an investor and a portfolio manager enter into a contract where the investor gives a fixed sum and the manager invests on his behalf using the investor’s demat account.

According to Trustline Holdings, a boutique investment advisory, investors have seen returns upward of 20-25% via PMS. “Over the past year, I have seen an increase of salaried people coming to me for PMS,” says Chennai-based N Arunagiri, founder of Trustline. “These people want to get out of their real estate holdings. Most of them have investible surplus of about ₹25-35 lakh.”

Within real estate, investors have changed their pattern for real estate. “They are now investing in debt instruments, say, debentures, where they are assured of a fixed return. These are also backed by corporate guarantees and post-dated cheques,” said Nishant Agarwal, of ASK Wealth Advisors. “HNIs don’t have much faith in the upside of real estate.”