Indian real estate has a paradoxical reputation as an asset class. On the one hand, it is the country’s preferred choice of investment, with nearly 70% of total Indian household wealth parked in flats, plots, land and other properties, and the Indian property boom is widely acknowledged as one of the great wealth creators in the world today. On the other, Indian real estate is seen as a time-consuming and complicated investment, requiring local knowledge, substantial effort and no small amount of luck to come out on top. As a result, most property investments are localized, with investors buying real estate where they – or their family – live.
One company is changing all that.
Meet SmartOwner, India's largest marketplace for real estate and other high-value assets. Founded in 2012, the Bangalore-based company makes investing in Indian real estate (almost) as easy as playing the stock market.
How? Believe it or not, basic economic theory. SmartOwner has redefined what it means to be a buyer in a high-ticket transaction, bringing together hundreds of individual investors and negotiating an institutional-grade deal with major developers on their behalf. This way, each SmartOwner client gets an amazing rate of return without having to do the heavy lifting of dealing with developers, giving them access to opportunities that are normally only accessible to the ultra-wealthy. Each opportunity is both rigorously vetted and incredibly easy to participate in, with the entire transaction taking place online.
The end result? An investment that combines the simplicity of the stock market with the return potential of a well-chosen property purchase.
A complete package
SmartOwner’s secret lies in its comprehensive approach to sourcing, selling, and exiting real estate deals. Not just any deals, mind you – the company estimates that it goes ahead with less than 1% of the deals it examines. In order for a particular property to warrant the company’s capital, it must pass an incredibly rigorous due diligence checklist, ensuring that every SmartOwner investment is sound from a legal, financial, and project-specific perspective.
Once a property passes the due diligence process, SmartOwner funds a large part of the project in exchange for exclusive terms. For developers, this is preferable to a high-interest bank loan. For SmartOwner’s clients, this represents access to a rate they’d never be able to negotiate themselves.
Sourcing and deal-making aren’t all SmartOwner takes care of. Each deal is discretized and passed along to individual investors, who simply need to wire the funds in, sit back, and watch their money grow. A state-of-the-art control panel lets investors track their SmartOwner portfolio in real time, providing transparency in a notoriously opaque industry. On top of this, the company has a division focused on obtaining exits, transforming Indian real estate into a true turn-key investment.
The true power of SmartOwner’s approach, though, is most visible in the investment flexibility it offers. Real estate is traditionally thought of as a lumpy asset, with a long holding period and an appreciation-based payday. However, SmartOwner’s unique investment model can be structured in several different ways, allowing the company the ability to tailor the offering to the needs of different types of clients.
‘Just getting started’
This exceptional approach to Indian real estate has allowed SmartOwner to sustain rapid growth for years, and the company is now the undisputed leader of Indian property marketplaces. To hear them tell it, though, they’re just getting started.
‘Historically, most of our clients have been HNIs and ultra-HNIs, although we do have several clients in the mass affluent category as well’ reveals Vikram Chari, SmartOwner’s CEO. According to Chari, this flexibility has allowed clients who would traditionally be priced out of the market to participate in exclusive opportunities.
Flexibility isn’t the only new development coming out of SmartOwner. The company recently funded its first commercial project, and Chari is positive that the basic business model – redefining being an investor in high-ticket transactions – can work with any high-value asset. ‘We’re not particularly picky when it comes to the underlying type of asset. While real estate is our core competency, we’ve examined cars, yachts, planes, you name it. As long as the asset’s fundamentals are sound, and the numbers are good for our clients, we’ll look into it,’’ explains Chari.
More than anything else, it is this undying commitment to the investor that fuels the company’s remarkable growth. With an 80% reinvestment rate, SmartOwner has succeeded in creating an investment service that keeps people coming back for more.For SmartOwner, though, there’s always room for improvement. “When we reach 100%,” laughs Chari, “I’ll be happy.”