In the midst of a turbulent global economy characterized by high unemployment and high inflation coupled with much shorter economic cycles today, investors are looking to safeguard their portfolios against impact of recessions. The key to this is in adequate portfolio diversification. While most investors understand this, a common pitfall for many is in a false sense of diversification. For instance, investing in an index fund or mutual fund may feel like adequate diversification, but this is not entirely accurate. The fluctuations in stock markets would still affect your entire portfolio. To truly safeguard against market instability, it’s crucial to have a wide array of asset classes in your portfolio. One such asset class is real estate alternative investments.

Real Estate: A Strong Recession Proof Asset Class

Real estate has consistently demonstrated its resilience during times of recession, providing a safe haven for investors during economic downturns.

Some factors that make real estate an attractive investment proposition include:

1. Tangible Asset: Real estate is a physical asset and holds intrinsic value because of its utility (housing and offices) even when markets fall.
2. Perpetual demand: Regardless of the economic climate, the demand for property persists as housing is a fundamental need.
3. Low Correlation with Stock Markets: Unlike many asset classes, real estate historically shares a low correlation with financial markets, acting as a buffer against stock market volatility.
4. Protection Against Inflation: In a high inflation economy, real estate prices and rents often rise alongside consumer prices, making it a hedge against inflation.
5. Steady Cashflow: Real estate generates steady cash flow, which can be valuable in a recession, when other sources of income may become unreliable (like dividends on stocks).

In India, property prices have skyrocketed over the last few years, especially post covid. Indian residential real estate achieved decadal high sales in 2023 with capital values growing at 10% Year on Year and continues to scale further in 2024. For investors who already have a finger in the pie, this is great news. But, for retail investors seeking to break into this space, there are many challenges to direct ownership of real estate like high property prices, property management hassles and illiquidity.

This is where alternative investments in Real Estate emerge as a viable solution. It opens the door to participate in this Indian Real Estate growth story with low investment sizes.

For investors looking for a regular source of passive income, opportunities like Real Estate bonds secured by Grade A Real Estate Projects, offer fixed returns up to 16% p.a. with monthly payouts. They offer predictable returns that can be valuable during times of economic uncertainty.

For Investors who are looking for a longer investment horizon of 5-6 years, Fractional ownership in Commercial Real Estate (CRE) also poses a viable option, where investors can earn rental yields up to 8% p.a. and total returns of 12-13% IRR with the property appreciation.

These Real Estate Investment Alternatives open the door to investment in high-grade institutional quality real estate at low ticket sizes.

The Restack: Shaping the Future of with Real Estate Alternative Investments

With tech-enabled platforms, investing in real estate has become simpler and more sophisticated. The Restack offers an easy, streamlined and fully digital process, making it easy to get started. Moreover, with quarterly updates on your digital dashboards you remain updated on the status of your investment and property.

All investments on the platform are institutional-quality and vetted by a team of financial and third-party legal experts – mitigating risks and maximizing returns. With The Restack, you are joining a community of forward-thinking investors who understand the tremendous potential of real estate.

Disclaimer:

NCDs are subject to risks. Please make your own independent assessment of the merits and the risks of the investment opportunities available on the platform or mentioned in this blog, and conduct your own diligence and consult your own advisors on the legal, business and tax matters. The Restack does not give any investment advice or recommendation in respect of the opportunities available on the platform or mentioned in this blog and accordingly, nothing on the platform or in this blog should be considered as an investment advice or recommendation. Please refer the terms and conditions for further details.