Every personal-finance thread turns into a real-estate vs stocks debate at some point. It's the wrong framing. Both are core asset classes for Indian investors; the question is how much of each, and why.
Long-term returns
Indian large-cap equity has delivered ~12% CAGR over long horizons. Top-city residential real estate has delivered ~8–10%, plus ~2–3% rental yield — call it 10–13% total. Grade-A commercial real estate has delivered 11–15% IRR in institutional hands. The asset classes are in a similar band, but get there differently.
Volatility
Equity is mark-to-market daily; real estate is not. That makes real estate feel smoother, but only because you don't see the volatility — it shows up at exit, not daily. Equity drawdowns are quicker and more visible; real-estate drawdowns are slower and structural.
Liquidity
- Equity: T+1 settlement, continuous exit.
- Listed REITs: near-daily liquidity, slightly thinner order books.
- SM-REITs: listed but early in trading volumes.
- Private fractional: platform secondary market; depends on buyer availability.
- Direct property: months of transaction time, significant friction costs.
Tax
- Equity LTCG: 12.5% above ₹1.25L / year.
- Real estate LTCG: 12.5% without indexation (or 20% with indexation for pre-2024 holdings, per current rules).
- Rental income: taxed at slab after 30% standard deduction.
- REIT distributions: split across interest / dividend / amortisation components — read the tax statement.
Correlation
Indian equity and real-estate returns are not highly correlated over long horizons. Real estate acts as an inflation-passthrough and a diversifier in a typical equity-heavy Indian portfolio.
A simple allocation heuristic
For most salaried investors with ₹1 Cr+ of financial assets: equity 50–65%, debt 15–25%, real estate 15–25%, gold 5%, cash 2–5%. Adjust based on life stage, risk tolerance, and existing home ownership. Fractional real estate is a clean way to build the real-estate slice without buying a second house.