Individual wealth in real estate grew by 8.62 per cent to reach Rs 60.25 lakh crores in FY17 and is likely to double, to reach Rs 121 lakh crores in the next five years, according to a study by brokerage Karvy India Wealth Report. Demonetisation, implementation of RERA and GST, are transforming real estate sector in India, said the study.
“Individual wealth in physical assets grew to Rs 140 lakh crores in FY17, having grown by 5.92 per cent, as against 10.32 per cent recorded in FY16. Individual wealth in gold stood at Rs 68.45 lakh crores, which is close to half of the total physical assets base. Similarly, wealth in real estate came in second at Rs 60.25 lakh crores,” Karvy Private Wealth said in its eighth edition of the India Wealth Report. Gold and real estate together form nearly 91 per cent of the physical wealth in India, it said.
“In the physical assets space, Indians’ love for real estate will continue. Wealth held in real estate is likely to double to Rs 121 lakh crores, over the next five years. This indicates a revival of growth in the real estate sector in the coming years, on the back of increased transparency in regulations, along with renewed focus on the affordable housing segment,” Abhijit Bhave, chief executive officer of Karvy Private Wealth, said in the report.
By FY22, the proportion for real estate will increase to 51.57 per cent, against 43 per cent in FY17, growing at a CAGR of 15 per cent, the report said. Despite contraction of the physical assets base, real estate is likely to become the most preferred physical investment option for Indians in coming years, according to the report.
The report also covers the concept and need for having a ‘family office’ among the ultra-high net worth individuals. Family offices bring together teams of legal, financial, investment and administrative experts, to provide a wide bouquet of services to the ultra-high net worth individuals, it says. These services cover two broad areas – managing the corpus and wealth of families and setting up structures and processes, for smooth transfer of wealth through generations.
“Be it philanthropic investments or strategic equity investments, property management or personal tax advice, succession planning or M&A, children’s education or personal counselling, family offices are much more than just wealth management and investment advisory firms,” the report said.