THE IMPACT ON BUSINESSES AND WEALTH EROSION IS EXPECTED TO WEIGH ON THE INVESTMENT DECISIONS OF HNIS: JLL
Shopping Centre News|January 2021
Real estate, which plays the dual role of contributor as well as a beneficiary of growth, will prove to be the most important asset class in the HNI portfolio due to its tangible nature and associated wealth indication

Real estate has been one of the oldest and preferred investment avenues for this investor segment. In India, real estate is preferred due to its tangible nature, stable income, steady returns and collateral value. These investments have undergone a transition over the last decade and offices have become one of the most preferred choices now. India has more than 600 million sq ft of Grade-A office space across its top seven cities in Q1 2020 and saw record absorption, steady rentals and low vacancy levels until the onset of the global pandemic.

“Real estate, which plays the dual role of contributor as well as a beneficiary of growth, will prove to be the most important asset class in the HNI portfolio due to its tangible nature and associated wealth indication. Furthermore, the nature of investments within real estate has seen diversification with higher allocation towards commercial assets and investments in publicly traded Real Estate Investment Trusts (REITs), helper investors reimagine deployment strategies,” said Ramesh Nair, CEO & Country Head (India), JLL.

The study of investments in real estate, which accounts for the largest share of the HNI investment pie after equity, forms the basis of this report. The COVID-19 pandemic has impacted all economic activities, and investments are being held back due to a high level of uncertainty in the market presently. The impact on businesses and wealth erosion is expected to weigh on the investment decisions of HNIs. JLL sees challenging times ahead and it is perhaps the best time to think through our investments and make insight-based decisions.

Real Estate - The Most Preferred Investment Option After Equities

Portfolio diversification is universally followed as an investment dictum and wealthy investors are no exception. These allocations tend to maximise returns, while trying to manage the associated risks. Asset classes like equities and real estate have been through a cycle of volatility following the global financial crisis and have emerged as key assets in the global HNI portfolio.

Real estate accounts for 23 percent share of Global HNI investments in 2019

Equities account for the highest share of investments at 28 percent due to their long-term return potential, reflecting the risk-taking abilities of HNI investors. Equity investments are preferred by investors as they are more liquid compared to other asset classes

Real estate investment, due to its tangible nature and associated wealth indication, continues to be a traditionally favoured asset class with 23 percent share. The nature of investments within the asset class has witnessed diversification with more allocation towards commercial assets and investments in publicly traded Real Estate Investment Trusts (REITs).

Stable income with a principal protection objective has been achieved through investments in bonds, which accounts for 16 percent share. The allocation towards this asset class acts as a hedge as its returns improve when equity markets decline.

Global uncertainty, slower economic growth and trade tensions have led to investors preferring to stay put in cash and cash equivalent, forming a 19 percent share.

HNIs with a high-risk appetite have been investing in private equity as it offers superior risk-adjusted returns as well as access to new technology-driven ventures.

Equities account for the highest share of investments at 28 percent due to their long-term return potential, reflecting the risk-taking abilities of HNI investors. Equity investments are preferred by investors as they are more liquid compared to other asset classes

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