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Commercial real estate and luxury residential real estate has been High Net Worth Individuals’ piece of cake and was almost inaccessible to investors with smaller ticket sizes. The properties with high yield were also deemed to require high investments. This concern has been addressed by the Fractional Ownership Investment concept that is gaining traction in India.
Under fractional ownership, the high graded assets are fractionalized into smaller ticket sizes. The investors can invest and buy the shares that generate regular income, which can later be sold at their discretion.
How to make Fractional Ownership Investment?
There are myriad options to invest through Fractional Ownership. You can choose to own a part of commercial property like a warehouse and office space. You can rejoice in the right of a luxurious home without extending into high financial brackets.
Fractional Ownership Investment Options
Warehousing
Owing to the market shift towards digitization, the e-commerce business has gained traction, which presses the need for warehouses.
The Indian warehousing market is anticipated to grow to $19.5 billion by 2025. Any fall in demand is interim and can be attributed to the pandemic. In short, the lockdown and the emphasis on social distancing might pull the market down, but for a short period.
Amid the challenging times, a tech-enabled fractional investment platform has raised Rs.140 crores for the investment in three warehouses. The assets being pre-leased properties earn the returns from the very first month of investment. The assets are expected to offer a rental yield of 9.5 – 10%, the highest among prevailing investment instruments like mutual funds, fixed deposits, and etcetera.
Warehousing is the new trend picking up the pace, so it will not let you down anytime soon. There is indeed a long way to go. Fractional ownership has opened the doors for investors with small ticket sizes. If you are awaiting an opportunity to invest in a high yielding asset, then you may try your hands in the warehouse market.
Office spaces
The market trends foresee that the office spaces would be high in demand. The companies prefer office spaces to reduce capital expenditure on setting up and maintaining immense office structures.
According to the JLL report, Hyderabad is the fastest growing office space market across India, with a higher spatial distribution than most metropolises like Mumbai and Delhi NCR.
Fractional ownership has paved the way for these high-value asset classes. Investors with an amount as low as Rs.10 lakhs can now own a part of the office space. There are startups where the investors can bag a commercial property like office space under fractional ownership with a rental yield of 8.65%. The assets’ value stands at few crores, but the ticket sizes are as small as Rs.10 Lakhs making way for investors of all budget points.
If you plan for a long term investment, you can always go with it, as it fetches hassle-free ownership at a modest budget with high yields. Now that the tech giants are emptying their offices, office spaces may not have the harbor at the moment. Though office spaces may make way for the coming years, work from home culture seems to be the solution until we do away with COVID globally. You are advised to study the market trends before property speculation.
Luxury Residential Property
Imagine waking up in a house facing the beach, spending the best time of your life in a luxurious home! It sounds like a dream you would want to chase your entire life. Is it the capital that is draining your goal? Fractional ownership has come all the way to keep your spirits high! You can still own a house with your financial interests.
Luxury homes are emerging trends in the market. You can become part of the projects that earlier were accessible to the High Networth Individuals. You can own an opulent property with small investments through fractional ownership.
There are platforms like Renivesh, Assetmonk, Global Gate through which you can invest in high-yielding assets’ properties and join the asset class investment. You can earn a decent and steady passive income. The capital is almost appreciated to double in less than a decade in lavish residential properties. You can also use them for your personal use based on the agreement before purchasing a property. You can schedule the usage in advance. The peculiar feature of fractional ownership in residential property is you can experience your property while earning.
Benefits of Fractional Ownership Real Estate Investment
Diversify risk
You get to invest with small ticket sizes in multiple properties. You can adopt this strategy of diversifying your risk by investing in various properties.
Asset Management both Prior and After Purchase
As an investor, you need not bother about marketing. Neither do you have to worry about the property management after purchase. Properties under fractional ownership generally have a manager to supervise the property.
Reduced Potential Losses
As you get to invest in multiple properties, the risk of potential losses reduces substantially under any non-performing asset. You can still generate income from other performing properties. After all, real estate is a calculated investment.
Profuse Investment Options
There are abundant options to invest with under fractional ownership. You may invest in residential properties, office spaces, warehousing, to name a few. You can check the trends and invest accordingly.
Through fractional ownership, you can invest in institutional grade properties with a reduced investment. Unlike the traditional full ownership properties, fractional ownership enhances the assets’ liquidity as you can sell your shares anytime and earn your returns. The properties under fractional ownership help the investors in scaling the returns upstream. This is because the platforms let the investors buy fractions of the high-grade assets.
Want to own a property? Assetmonk is a platform that offers properties under fractional ownership. Three types of properties, Growth, Growth Plus, and Yield, that are listed on our platform that are suitable for all the financial goals and terms of investments. Growth plus is a product exclusively for investors who invest in multiple properties through collective ownership and diversify their risk. The investor can enjoy the periodic rental returns with a good capital appreciation of the asset. The growth plus properties have an IRR of 16-19%, more than the conventional investment options. Visit Assetmonk for further details.
Fractional Ownership Investment FAQ’s:
Is Fractional Ownership a good investment?
Fractional ownership is one of the best investments in real estate as it lets you diversify your risk and build a high net worth portfolio with smaller investments.
What are the investment options under Fractional Ownership?
You can invest in commercial properties like warehouses, office spaces, and data centers. You can also invest in residential properties like luxury homes.
What is the rental yield of properties under Fractional Ownership?
The rental yield of properties under fractional ownership varies from location to location. It is approximately three times higher than mutual funds and the other volatile instruments in the market. This is because the high graded properties are fractionalized for the investors, which yield high returns.
What are some of the platforms available to invest under Fractional Ownership?
Assetmonk, Strata, Renivesh are some of the available platforms to invest in real estate under fractional ownership.
