ASK Curated Luxury Assets Fund (CLAF-I): Institutional Access to India's Luxury Real Estate

Introduction

High-net-worth individuals (HNIs) from India have long preferred investment in luxury properties to preserve their fortunes but doing it the right way is not easy. Investing in a single villa or branded residence entails writing a single cheque and taking concentration risk in the project. Diversification, on the other hand, will require funds and sources of investment which individual investors do not necessarily have. This is where the ASK Curated Luxury Assets Fund (CLAF-I), a Category II Alternative Investment Fund registered with SEBI, comes in.

Backed by Industry Leaders

The fund is co-sponsored by ASK Property Fund, a unit of ASK Group (Blackstone portfolio company), and India Sotheby's International Realty. ASK provides expertise in deal structuring, underwriting, and active asset management while India Sotheby's provides access to the luxury market, i.e., connections with ultra-high net-worth individuals and the capability to sell off luxury inventory after construction is complete. Both pieces are necessary for making the strategy successful: no luxury brand can guarantee capital protection without proper underwriting, and a fund manager cannot liquidate its assets without an appropriate distribution channel. The investment committee reflects this pairing of skill sets: Amit Bhagat, ASK's CEO and MD, brings over 30 years of real estate experience and has overseen more than ₹88 billion in investments, working alongside Lakshmipathi Chockalingam, who has led 17 million sq. ft. of projects, with ASK Group Chairman Sameer Koticha providing overall risk and governance oversight.

Investment Strategy and Return Potential

The business plan focuses on premium homes, golf villas, vacation homes, and branded residences in MMR, NCR, Bengaluru and prominent coastal and hill-stations in the MMR market, with an entry into the market through conservative valuations and pari passu investment in investee companies. The options for the investors include equity investment with an expected return of 27-30% over 3 to 5 years, and debt investment with an expected return of 19-21% over 3-4 years.

Track Record and Structure

The past record of the investment company is based on numbers rather than projections, and ASK has managed to raise close to ₹8,900 crores in their real estate funds, deploy ₹7,400 crores, and generate ₹7,200 crores from 31 complete exits with a 19% average IRR and 1.7x MOIC. CLAF-I has already closed its initial close against a target of ₹1,000 crores (₹500 crores greenshoe). The company will invest 7% of its equity, with a period of 6 years, 12% hurdle rate, and management fee reducing from 2% to 1.25% after ₹25 crores. It has also made a ₹500 crores platform deal with developer Amavi by Clarks, alongside an active pipeline spanning South Mumbai (₹200 crores commitment, targeting 23% IRR, currently under due diligence), Goa (₹70 crores commitment, targeting 25-30% IRR, in documentation stage), Gurgaon in the Delhi NCR market (₹150 crores commitment, targeting 25-30% IRR), and Kasol, a premium lifestyle destination under evaluation.

Conclusion

The six-year lock-in period is a true commitment, although it is similar to the build-to-sell period of a luxury property – investments that require rapid liquidation from real estate usually take shortcuts. For high-net-worth individuals comfortable with a six-year holding period looking for exposure to the luxury real estate market without being concentrated on one single project, CLAF-I is a solidly designed investment option with an additional advantage of individual (and not fund) level taxation under the Category II structure: capital gains from the equity component are taxed at 12.5% LTCG when held beyond 24 months, while returns from the debt component are treated as interest income and taxed at the investor's applicable slab rate.

Disclaimer: This article is intended solely for informational and educational purposes and should not be considered investment advice or a recommendation to invest in the ASK Curated Luxury Assets Fund (CLAF-I) or any other financial product. Investments in AIFs are subject to market risks. Please read the offer documents carefully.

Source: ASK Curated Luxury Assets Fund presentation