Let me begin by asking you a question: “There is a commercial property worth Rs 20 crore; would you like to buy it?” Most likely, your response would be a firm “no way!” However, what if I were to propose, “Would you consider buying 1% of that real estate property for just Rs 25 lakhs?” In that case, I believe you might be inclined to contemplate this option. presents you with such an opportunity.
We often come across the concepts of joint accounts, joint ventures, joint assets, and joint owners, both in professional and personal settings. This is a longstanding practice observed among family members or friends, whereby a specific asset is purchased collectively, with the associated costs divided among individual stakeholders. This arrangement allows each participant to possess a portion, or fraction, of the asset, hence the term fractional ownership.
What is fractional ownership in real estate?
A joint investment approach known as fractional ownership in real estate involves several investors splitting the cost of a valuable asset like a grade-A commercial property. Retail investors are now able to participate in real estate opportunities that were previously inaccessible but highly profitable due to this model. By allowing investors to buy a portion of a large property, fractional ownership can lower risk and diversify their investment portfolios.
Fractional ownership is an emerging .
How does it work?
Let’s talk more about my initial question to you. You own 1% of the property because it is worth Rs 20 crore but you only have Rs 25 lakh to invest. In the same way, there might be additional interested parties. Fractional ownership platforms (FOPs) and websites, which I previously mentioned, assist you in researching and managing documentation, legalities, and much more to make this commercial real estate investment easier.
Fractional ownership is less complicated because, in the unlikely event that you decide you no longer want to keep the property, you can easily sell just your share to a new buyer rather than the entire property.
Is it safe to invest?
It is, indeed. Many SEBI-registered online platforms enable people to invest between Rs 20 and Rs 25 lakhs or more in real estate.
Assetmonk, an alternative investment platform, for example, offers a fractional ownership model where investments are secured and starts as low as 25 lakhs.
The trend of fractional ownership real estate in India
Though fractional property investment is a relatively new idea in India, investors looking for a flexible real estate investment strategy have quickly been interested in it.
The fractional ownership market in India is grew from Rs 1,500 crore in 2019 to Rs 4,000 crore in 2023, according to a recent report by TruBoard Partners.
According to Knight Frank data, the fractional ownership property market in India is projected to grow at an annualised rate of 10.5%—is expected to expand by 65 percent by 2025.
The trend has been influenced by a number of factors, including the declining affordability of premium properties, shifting investment and lifestyle preferences, the smooth tech-facilitated user experience, and the increase in start-ups and investment platforms.
Is The Trend Here To Stay?
It is here to stay! Due to its aspirational nature, ease of tracking, and potential for high returns and diversification, the fractional investment model is quickly becoming more and more popular, democratising the world of investing opportunities.
It gives you access to high-value assets and properties and maximises your benefits while providing more people with investment opportunities. It’s the new commercial real estate investment method with a lower entry barrier.
Benefits of fractional ownership real estate
- Investment Diversification: Investors can diversify their real estate holdings through fractional ownership without making a sizable financial commitment. In a market as diverse as India, where real estate costs can vary greatly between locations, this is particularly attractive.
- Improved Accessibility: Individual investors frequently lack the financial means to purchase expensive Grade A commercial properties in desirable areas. These properties are now accessible because fractional ownership permits investors to buy a portion of them.
- Mitigation of Risk: The risk involved with investing in real estate is distributed when co-owners split the financial load. It can offer greater financial stability and reduce exposure to market swings.
- Expert Property Administration: Professional property management is usually included in fractional ownership arrangements. As a result, investors can profit from owning real estate without having to worry about ongoing maintenance duties.
- Potential for Attractive Returns: Because premium properties usually appreciate over time, investing in them can often yield attractive returns. It is estimated that fractional real estate ownership in India yields an impressive 18% annual return on investment on average.
- Encouraging NRI investment in India: For non-resident Indians (NRIs) wishing to participate in the Indian real estate market without having to make a sizable capital investment, fractional ownership is an appealing choice. This may result in more foreign investment and support the expansion and advancement of the Indian real estate market.
Additionally, The increasing digitization of society has made tracking these investments across various platforms more convenient. It contributes to increased portfolio diversification, which lowers risks and results in a more resilient and balanced investment strategy.
Is it different from timeshare ownership?
It is, indeed. Instead of owning time units, fractional ownership allows you as an investor to own a portion of the title. Under fractional ownership, the value of the investment’s shares rises in accordance with the asset’s value. It is a collaborative effort to own any kind of asset along with known people.
Factors to Consider Before Engaging in Fractional Real Estate Investment
Investing in fractional real estate can be an enticing opportunity, but it is important to carefully evaluate the associated considerations and risks. Here are some key points to keep in mind before entering into fractional investment:
- Thorough Property and Platform Analysis: Before committing to a fractional investment, conduct extensive research on the specific property and the platform facilitating the investment. It is crucial to understand the platform’s track record, fees, and terms.
- Legal and Regulatory Environment: Familiarize yourself with the legal and regulatory framework governing fractional ownership in the region where the property is situated. Ensure that both the investment and the platform comply with the relevant regulations.
- Assessment of Market Risks: Evaluate the present and future market conditions in the property’s location. Real estate values can fluctuate due to economic factors, local developments, and other market dynamics.
- Consider Long-Term vs. Short-Term Goals: Determine your investment horizon and objectives. Real estate investments often require a longer time frame to realize substantial returns. Consider whether you are seeking short-term profits or long-term appreciation.
- Exit Strategy: Understand the terms and conditions for selling your fractional share. Fractional investments may lack the liquidity of publicly traded assets, and there may be certain restrictions on selling.
- Reliability of the Investment Platform: Select a reputable fractional investment platform. Conduct thorough investigations into reviews, testimonials, and the platform’s history to ensure it is trustworthy and has a solid reputation.
- Understanding the Nature of the Asset: Evaluate the type of property you are investing in, whether it is residential, commercial, or industrial. Each property type has different risk profiles and potential returns, so assess how well it aligns with your investment goals.
By carefully considering these factors, you can make informed decisions regarding fractional real estate investments, mitigating risks and increasing the chances of achieving their desired financial outcomes.
The Future of Fractional Ownership in India
The Indian real estate market has a lot of potential when it comes to fractional ownership. It is anticipated that the idea will spread more widely as regulations become clearer and it receives greater recognition. Investors will be able to access high-value properties, diversify their real estate holdings, and take advantage of expert management services.
The Securities and Exchange Board of India (SEBI) is now ready to regulate these Fractional Ownership Platforms (FOPs) in order to protect investors and promote market growth, given the growing acceptance and value of investing in these platforms.
If you’re thinking about fractional ownership, you should thoroughly investigate the opportunities in the Indian market and get legal and financial advice. This ground-breaking movement is poised to completely transform the commercial real estate investment landscape in India, opening it up to a wider spectrum of investors and promoting inclusivity.
Bottom Line
In summary, fractional ownership is a revolutionary force that is changing the Indian real estate market, not just a passing trend. It is crucial to the market’s future because of its capacity to democratise wealth, reduce risks, and awaken dormant capital. Adopting fractional ownership is an investment in the future as well as a wise financial move.
For investing in fractional ownership properties, is the best place for you. Assetmonk has been leading the line in the emerging alternative real estate investment space, and seeks to provide investors with unique opportunities for fractional ownership of prime commercial properties with a high Internal Rate of Return (IRR) and flexible liquidity options.
For long-term retail investors looking to expand their exposure to the CRE market and diversify their portfolios, Assetmonk’s fractional ownership options offer a high potential earning yield of 14 to 21% annually.