With rapid growth across the economy and innovations in manufacturing, digital and information technology, India is proving to be an exciting investment for American investors. Additionally, India is home to a rapidly growing economy, the largest youth population in the world, and rising global competitiveness.

Read on to learn why American investors should invest in India’s economy and how they can get involved.

India Has a Fast Growing Economy

India has one of the fastest-growing economies in the world and shows no signs of slowing. According to the United Nations Conference on Trade and Development (UNCTAD) Trade and Development Report 2021, India’s economy is projected to grow at 6.7% in 2022 – the fastest in the world during the year. 

Additionally, according to research provided by the Ministry of Finance, “India’s real GDP is projected to grow at 9% in both 2021-22 and 2022-23 and at 7.1% in 2023-24. This projects India as the fastest growing major economy in the world in all these three years.”

India Has the Largest Youth Population in the World

According to the United Nations Population Fund, India has its largest ever adolescent and youth population. The country will continue to have one of the youngest populations in the world until 2030. 

Young people can transform the social and economic future of the country when supported with investments in their education, development, and leadership. Further, the current youth population is highly educated and will carry these skills into the workforce.

The National Infrastructure Pipeline

The National Infrastructure Pipeline (NIP) is a first-of-its-kind, whole-of-government exercise to provide world-class infrastructure across India and improve the quality of life for all citizens. Launched in August of 2020, NIP aims to attract investments to India and help the country reach its goal of becoming a $5tn economy by 2025.

Rising Global Competitiveness

India has exceptional information technology and business process outsourcing. The farm output and nominal factory output industries have pushed the country to be ranked third in the world based on purchasing power parity (PPP).

According to World Bank’s Ease of Doing Business Ranking 2020, India jumped 79 positions from 2014 to 2019. Within these years, the country moved from 142nd to 63rd.

India Carries a Widely Skilled Workforce

India has been an attractive option for investors because of the country’s low wages and highly skilled workforce. In fact, India has the third-largest group of scientists and technicians in the world. This has led to a series of innovations in tech as well as created a successful startup ecosystem. 

What Are the Benefits of Investing in India’s Economy?

Due to its longstanding parliamentary democracy and liberal economic policies, India is a safer place than many other rising markets and put the country in investors’ minds for the past few years. Other benefits include:

• Positive demographics
• Strong economic growth
• Stable government

How Can Investors Get Involved? Let’s Talk about Private Equity

Private equity (PE) is a source of investment capital that comes from firms or high-net-worth individuals that directly invest in private companies. These investments may take the form of:

• Purchasing stakes in private companies
• Acquiring control of public companies with plans to take them private and delist them from stock exchanges

Tune in to Our Podcast to Learn More

In Episode 48 of the Live Life Liberated podcast, we discuss how to diversify your portfolio by investing outside of the U.S. markets by taking a look at private equity investment opportunities in one of the biggest emerging markets — India. 

In this episode, Derek Myron is joined by Manu Rikhye, partner at GrowX Venture Management. They talk about the emerging sectors in India and how you can invest in early-stage businesses during the different rounds of venture capital funding.

Manu talks about:

• Why more companies are opting for private equity instead of an IPO
• Factors that make India an attractive market to invest in today
• The investment life cycle of a company from idea stage to a large enterprise
• Mortality rates for early-stage businesses and expected returns if they succeed.
• And more

Learn more about Private Equity Investment Opportunities in India in our podcast, Live Life Liberated.

Disclosures

Centura Wealth does not make any representations as to the accuracy, timeliness, suitability, or completeness of any information prepared by any unaffiliated third party, whether linked to or incorporated herein. All such information is provided solely for convenience purposes and all users thereof should be guided accordingly.

We are neither your attorneys nor your accountants and no portion of this material should be interpreted by you as legal, accounting, or tax advice. We recommend that you seek the advice of a qualified attorney and accountant.

For additional information about Centura, please request our disclosure brochure as set forth on Form ADV using the contact information set forth herein, or refer to the Investment Adviser Public Disclosure website (www.adviserinfo.sec.gov). Please read the disclosure statement carefully before you engage our firm for advisory services. 

With inflation reaching 40-year highs, investors are eager to find investments to hedge against the decreasing value of their money. Multifamily real estate can provide opportunities for investors to protect themselves against their declining purchasing power.

Before we dive into how investors can turn to multifamily real estate to navigate these changes, let’s begin with why inflation and rising interest rates are occurring in the first place.

The Fed’s Shift from Quantitative Easing to Quantitative Tightening

In 2020, the Federal Reserve began quantitative easing (QE) to encourage investment and spur economic activity. In this process, the Fed expanded its balance sheet. 

These expansions included committing to purchasing:

• $80 billion a month in treasuries, and
• $40 billion in mortgage-backed securities

In June 2022, however, roughly two years after the quantitative easing plan was announced, the Federal Reserve began quantitative tightening (QT) to counteract inflation.

The quantitative tightening process includes allowing its purchased bonds to reach maturity and run off its balance sheet, which results in rising interest rates. Inflation is still heavily prevalent in the American economy. In fact, in Q2 2022, inflation sat at its highest point since 1982.

Why does this matter? Inflation can erode the value of an investor’s assets and negatively impacts the ability to purchase goods.

This considered, investors are looking for opportunities to shelter from inflation. Enter multifamily real estate.

Using Multifamily Real Estate as a Hedge Against Inflation

Multifamily real estate can serve as a hedge against inflation and be an attractive option for investors for several reasons, including that multifamily real estate:

• Has Intrinsic Value
• Recovers Quickly
• And more

Let’s discuss more below.

Multifamily Real Estate Has Intrinsic Value

Multifamily real estate is a necessity-based asset. To put it simply, residents need a place to live. Further, residents experience friction, such as time, cost, and effort if they are to move.

These factors suggest that multifamily real estate holds an intrinsic value and can lead investors to stable or potentially increased cash flow, despite inflation.

Demand for Multifamily Real Estate is Rising

Multifamily homes are becoming increasingly popular. Why? According to research, Millennials are moving into homes later than the Baby Boomer generation prior. Moreover, Millennials are still experiencing the effects of the recent2 020 financial crisis.

Additionally, Generation Z is entering the workforce with record low savings rates. This suggests most Gen Z will not be putting a down payment on a single-family home anytime soon, and will be more likely to choose multifamily housing.

Multifamily Real Estate Supply is Stagnant

Inflation typically results in price increases for construction. As a result, many development projects are postponed or delayed. These delays can decrease new supply, make new homes more expensive, and lead to a rise in demand.

Rent Rate Raising Due to Inflation

Rent rates across the nation have continued to trend upwards, climbing year over year. The average rental rate for a one-bedroom apartment is up 26.5% and two-bedroom apartments are up a similar 25.7%.

Rent raises allow investors to combat the effects of inflation.

Multifamily Leases: Short Enough Hedge Against Inflation

Multifamily leases typically last no more than 12 months.

This allows landlords to increase rents to coordinate with the annual rate of inflation. These increases can help real estate investors stabilize or potentially increase cash flow. Additionally, their multifamily investment appreciates in value.

Multifamily Real Estate Recovers Quickly

Investors often view multifamily real estate as “inflation resistant.” Why? This form of investment doesn’t typically drop in value as much as other assets during challenging market times. Additionally, multifamily real estate tends to recover faster than other investments.

For example, during the COVID-19 pandemic, the demand for other assets, such as office and retail buildings, dipped. However, the demand for multifamily real estate remained high. Short leases allow investors to utilize this demand and adjust rent raises.

Tune Into Our Podcast to Learn More

In Episode 57, Chris Osmond speaks with Paul Kaseburg, Chief Investment Officer of MG Properties, about investment opportunities in the multifamily real estate market and how they help you cope with rising inflation rates.

The discuss:

• How real estate, in general, responds to inflationary pressures
• The advantages of multifamily over other types of real estate investments
• Latest trends in cap rates and cost of debt that real estate investors should know about
• How inflation is impacting the affordability gap between single-family homes and apartment renting
• And more

Give it a listen!

How Else Can Investors Navigate Inflation?

At Centura Wealth Advisory, we are dedicated to our role as stewards in leading our clients to purposeful financial planning and investing strategies to ensure their success.

One of our goals is to help our clients navigate and understand challenging economic changes, such as the current rising interest rate environment and inflation.

Review our article “How to Plan and Invest in a Rising Interest Rate Environment” for more information.

Disclosures

Centura Wealth does not make any representations as to the accuracy, timeliness, suitability, or completeness of any information prepared by any unaffiliated third party, whether linked to or incorporated herein. All such information is provided solely for convenience purposes and all users thereof should be guided accordingly.

We are neither your attorneys nor your accountants and no portion of this material should be interpreted by you as legal, accounting, or tax advice. We recommend that you seek the advice of a qualified attorney and accountant.

For additional information about Centura, please request our disclosure brochure as set forth on Form ADV using the contact information set forth herein, or refer to the Investment Adviser Public Disclosure website (www.adviserinfo.sec.gov). Please read the disclosure statement carefully before you engage our firm for advisory services.