Real Estate SIPs: A Game-Changer for Small Investors

In a conversation with ETMarkets Smart Talk, Shobhit Agarwal, CEO of ANAROCK Capital, highlights how Real Estate SIPs are opening up the property market to small and first-time investors. By enabling participation with amounts as low as Rs 500 a month, these digital platforms allow investors to diversify into real estate without the burden of big-ticket purchases, making the asset class far more accessible and liquid than traditional property investments. Edited Excerpts –

Q) What exactly is a Real Estate SIP, and how does it differ from a traditional SIP in mutual funds?

A) With a real estate SIP, investors can regularly invest small amounts into real estate funds or REITs. This allows them to gain exposure to property markets without buying actual, physical real estate and offering them healthy diversification without high capital or management effort. Unlike traditional mutual fund SIPs that invest in stocks or bonds, such SIPs are directed specifically at real estate assets.

Q) How does fractional ownership or digital real estate make SIPs possible in real estate?

A) Fractional ownership and digital real estate make Real Estate SIPs possible by splitting up expensive properties into smaller parts. Investors buy these shares on a regular basis through SIPs, which gives them partial ownership of valuable assets like commercial premises. Digital platforms handle pooling, ownership records, and the distribution of rental income. This is an easy and cost-effective way for retail investors to invest in real estate.

Q) Who should consider starting a Real Estate SIP — first-time investors, HNIs, or retail investors?

A) They work well for first-time and retail investors seeking affordable, gradual exposure to real estate without much hassle and without shelling out huge chunks of capital. HNIs, on the other hand, tend to go for direct property investments or large-scale portfolios which give them better control and lets them tailor their asset allocation.

Q) How does one practically start a Real Estate SIP? What are the minimum investment amounts?

A) One needs to open or use a Demat and trading account with a SEBI-registered brokerage. It is important to study the available REITs or real estate funds before purchasing via a trading platform like stocks. The minimum investment can be as little as INR 500-1,000/month.