India's wealthy turn to real estate after poor stock market returns

India's wealthy investors are increasing their investments in higher-yielding assets such as real estate and logistics, following poor returns seen in the stock market over the last two years. According to a Businessline report, wealth managers are now observing a rise in investor interest in income-generating properties, logistics, warehousing, and infrastructure funds.

At least six new instruments launched this year aim to raise over $1.25 billion for real estate and infrastructure assets. Growth in this sector was previously slow, but a revival is now being witnessed. This trend is contrary to wealthy investors in other countries, who are investing more in the stock market to capitalise on the AI boom.

Mumbai-based Nuvama Wealth Management Limited, which manages $39 billion in client assets, is one of the local firms moving in this direction. The company has raised approximately $420 million for a commercial real estate fund in partnership with property consultancy Cushman & Wakefield Management. Ashish Kehairy, Chief Executive Officer of Nuvama, stated that they plan to launch more funds that invest in income-generating properties or infrastructure, which are eventually sold or listed.

Kehairy further added, "There is a growing inclination towards private credit and cash-flow generating assets." This includes investments made in Real Estate Investment Trusts as well as logistics and warehousing.

As the momentum of Indian equities slowed after years of growth, investors are now seeking more stable returns. Despite a rally in recent weeks, the benchmark Nifty 50 index has provided a total return of only 7% over the last two years, while the S&P 500 index saw a return of 29%.

Between March 2024 and June 2026, the amount collected from local investors in India through Alternative Investment Funds has nearly doubled to $64.5 billion. Although the highest interest is seen in private credit, family offices and asset managers are now turning towards funds investing in infrastructure, energy, and property.

Unlisted funds are particularly attractive to investors as they generally invest in completed assets. If these assets are sold or listed through instruments such as Real Estate Investment Trusts, investors may earn additional profits.

Local real asset funds may target annual returns of 12% to 15%, which is higher compared to the less than 8% return of 3 to 5 year AAA-rated corporate bonds. However, actual returns depend on several factors such as underlying assets, leverage, and exit valuation.

According to Citi's Global Family Office Report, family offices globally are directing more capital towards public equities and have maintained significant investments in private markets. This contrasts with the growing trend of alternative investments among India's wealthy.