Ashish Khandelia, Founder, Certus Capital

Ashish Khandelia has over 20 years of experience with expertise in Real Estate Investing and Lending. In his earlier roles, he led RE businesses at KKR and Morgan Stanley Real Estate (MSRE) in India. He has ~US$ 2Bn of transaction experience and has been instrumental in building three businesses around real estate banking, equity investing and lending. He founded Certus Capital in July 2018, with a vision to build an integrated real estate investment management platform. In 2019, Certus structured one of India’s first securitisation of wholesale RE loans (~US$200MM acquisition of such loans by a large institutional investor (US$120Bn+ AUM) from a distressed financier).


The negative effects of the pandemic on the Real Estate sector are a known fact. The sector had already been reeling under the slowdown until the pandemic hit and made it worse. But not all is lost. The naysayers may talk about a very long haul which will take years to revive, but this is, in fact, is a ‘survivalists’ market. The pandemic has created an unprecedented investment opportunity that is driven by quality. It is also nudging consumers to put a premium on homeownership vs financial investing. The post-COVID real estate sector in India is set to be driven by disruptive investment trends, which can be summarised, as under:

1. Private Real Estate Credit

The Indian Real Estate sector requires up to ~US$15Bn of new credit every year to sustain its average pace of growth. Until recently, this was primarily served by domestic non-bank lenders, which came to an abrupt halt when ILFS defaulted in late 2018. As domestic institutions scaled back, global funds focused on credit moved in to fill the gap. These funds are a major relief for the cash-starved residential developers and other stakeholders. Apart from the government-sponsored funds for the revival of stuck projects, many large institutional investors are getting active through their own special-situation funds. A large part of these is expected to be coming from the US and Asian countries. There have been more than Rs. 150 billion of real estate loan portfolios transacted over the last 18 months. But there is still a long way to go, considering the domestic lenders are still carrying ~$50 billion (Rs 3.5 trillion) in developer loans, part of which needs to find a new home.

2. Commercial Real Estate

As investment yields in the country have dropped across financial products, many investors are looking for risk mitigated assets that can give cash-on-cash yields and smart return on investments. With the equity markets being extremely volatile, investing in commercial real estate offers a prudent option. Thus, commercial real estate projects which are leased to global or MNC tenants are in strong demand from investors. The performance of Embassy Office Parks REIT, since its listing, and the massive demand observed by Mindspace Business Parks REIT IPO is a testimony of this interest. A quality commercial property can render a rental rent yield of 8%-9% and capital appreciation over the holding period. As more global corporations offshore their operations and other activities to India, the demand for office space is expected to remain strong, offering an interesting option for Investors.

3. Affordable Housing

The Residential real estate constitutes the largest segment within the Indian realty sector. A combination of factors, like increasing population, evolving aspirations, changing social norms and supportive demographics, are leading to the evolution of the Affordable Housing segment in India. The segment does not necessarily refer to ‘low-cost homes’ but reflects the need for ‘right size – right product – right price’ homes. Since the lockdown, the home loan rates have been reduced to a decade low, housing prices have stagnated, and regulatory incentives have been announced, ensuring the demand for these homes remain high. Central and State governments too have announced various schemes, chiefly the Pradhan Mantri Awas Yojana (PMAY), to support the development of Affordable Housing in India.

4. Rental Housing

India’s rental housing market is still in its infancy, with challenges arising out of a fragmented and unregulated sector that continues to be dominated by a huge number of individual owners. Even as modern concepts like ‘multi-family’ rental housing is an established concept in the developed countries, with a more organised and institutionalised rental housing market, the Indian market still has a long way to evolve. However, the millennial generation that is naturally inclined to renting instead of buying, the sector is expected to grow significantly. Increasing preference for ‘plug-and-play’ homes and mobility ranking higher on preference scale, and with the evolution of student housing, which offers dedicated spaces for students on a rental basis, the Indian rental housing sector is set to experience accelerated growth. The government is also working on an Urban Rental Housing Policy to regularise the rental market in the country. As a sector, it is expected to become a potential segment for attracting investments from real estate private equity funds initially and overtime through REITs. However, certain regulatory changes allowing foreign investment in completed residential units will be necessary before this can become a reality.

5. Off-grid properties / Second home investing

While this is not a new concept as we have always desired that second home in a quaint place amidst nature and away from the chaotic urban rat race, it is surely much closer at home now. The pandemic has forced people to evolve their working styles and become more adjusted to working from home. The format allows people to choose dwelling in the suburbs, much away from the city in the middle of nature, breathing easy, building immunity, and adequately maintaining social distancing, which is not possible to maintain in the densely populated city spaces. There will be a rising focus in developing these liveable low-density cities and therefore, another disruptive real estate investment trend. It is happening globally, and India may also follow suit.

All the above factors point towards the rising significance of institutional and private funding in the Indian real estate segment, and the trends that will shape it. As the real estate sector matures, the investment will be driven into dedicated spaces and trends, rather than into general development options as was the case in the past. It is notable to understand that supportive State and Central Government’s policies and regulatory interventions will also play a vital role in making this an effective transformation.

More about Ashish Khandelia and Certus Capital

Prior to Certus, Ashish Khandelia was the Co-Head of KKR’s Real Estate business in India. Under his leadership since 2013, KKR RE business invested more than US$1Bn in high-yield real estate credit. Before KKR, he was Head of Acquisitions for Morgan Stanley Real Estate, India wherein he was part of US$700mm+ of primarily equity investments. He has also worked at Kotak Investment Bank and Ernst & Young. At Kotak, he was instrumental in establishing Kotak’s real estate investment banking practice and executing one of the first entity-level PE investment in the Indian real estate sector. Ashish is a management graduate from Indian School of Business, Hyderabad, and a Chartered Accountant.

Ranked among the top 5 advisors (CY 2019) in the BFSI space, Certus Capital is in its third year of operations in India. Founded in the year 2018, by Ashish Khandelia (former Co-head of KKR’s India Realty Investments), the firm partners’ institutional investors and family offices to invest in real estate (RE) opportunities in India.

Backed by the team’s 50+ years of investing experience with global institutions, Certus Capital aims at simplifying Institutional Real Estate investing in India. Just in its third year of operations it recently partnered (Feb 2020) an institution (USD 40 bn + AUM) in its USD 0.58 bn acquisition bid. Valued for its transparent and methodical approach towards investment selection and partnership process, the Company is making a quite impact with its bespoke solutions. Last year (Jan 2019) Certus originated & structured one of India’s first securitisation of wholesale RE loans. The firm targets deep value and scalable opportunistic plays created by capital dislocations. Integrity, Excellence, and Perseverance are the principles that define Certus and the partnerships it seeks to create.



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