The Future of Fractional Ownership in Indian Real Estate For Next 5 Years

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  • 5 min read
  • November 29, 2021
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What is the future of fractional ownership real estate India? The concept of fractional ownership in the Indian real estate market or fractional ownership real estate India is still in its infancy, but it is expected to get valued at more than USD 5 billion. Fractional ownership or fractional ownership of real estate is the future of the Indian real estate industry since it addresses an issue with commercial property: the high entry barrier of required investment.

If this pandemic has forced us to reconsider how we make financial decisions and save and invest, it has done so. As if wage cutbacks and layoffs weren’t awful enough, hundreds of individuals lost their hard-earned investments in stock markets and mutual funds, and some had to break fixed deposits or sell their property to access their assets.

The dire questions we all have: how to build a pandemic-proof and reliable investment that gives regular and liquid dividends directly to our pockets while also providing long-term financial appreciation? Surprisingly, one type of investment shone out in the previous year: fractional ownership of commercial real estate (CRE). Fractional real estate investing India is still in its infancy, but the market is now valued at $5 billion and expanding. Fractional ownership of real estate is predicted to be the future of India’s real estate industry since it addresses one of the most significant issues with commercial property: the high entrance barrier or capital expenditure required.

The fractional ownership market in India or fractional real estate investing India is steadily growing, with the commercial real estate market expected to expand by 16 percent in the future years. The demand for fractional property will rise as a result. 

But, first, what is fractional ownership real estate? Let us understand what fractional ownership is all about. 

So, what is fractional ownership or fractional property investment?

‘Little drops of water, Little grains of sand, Make the mighty ocean’ are timeless phrases by poet Julia Carney. Small, yes!

What is fractional ownership real estate?

Let us be honest about something. We have all run away from the thought of investing in real estate because the capital outlay needed is too high for us. However, let me tell you that that can change now. Let me tell you that you can now invest in real estate and the commercial real estate market with just a few thousand rupees through fractions ownership. Assetmonk, for example, offers high-quality real estate investments with a minimum starting amount of Rs. 10 lacs. All hail, fractional ownership!

So, what is a fractional investment? A fractional real estate ownership plan or fractional property investment is an investing strategy in which a group of people pools their assets to get finance to buy real estate. Each investor has a stake in real estate. Fractional investment is the ideal investment since all members share the costs, earnings, and financial obligations for the property. For instance, fractional property ownership or fractional real estate investing is analogous to stock market investing. The investor can choose which properties to own infractions. In actuality, however, the concept does not correspond to the stock market.

Read Debunking Popular Myths on Fractional Ownership.

Real estate investments are advantageous types of investment due to high asset appreciation. Investors can utilize fractional ownership to diversify their investments. However, real estate investments require significant capital, making the asset class inaccessible to investors. Investments in assets for personal and business reasons like private boats or Special Purpose Vehicles are part of fractional real estate ownership. As a result, high-end investments are now available to people of all financial backgrounds.

Why are fractional investments in commercial real estate on the rise?

Why is fractional real estate investing India on the rise? In India, fractional ownership is still in its infancy and is yet to get recognized as a mainstream investment class, similar to equities and mutual funds, although it is gaining appeal. To determine whether or not this fractional ownership real estate India will be successful in the future, we must first analyze its current state. While the concept is still relatively new, the fractional ownership sector in India or fractional ownership India gets believed to be worth $5 billion in the next five years.

In India, fractional ownership of commercial real estate or fractional real estate investing is progressively increasing, with the commercial real estate market predicted to rise by about 13 percent – 16 percent over the next 5 years. Several of the causes for this anticipated boom connect to the increased need for office commercial space in the future year, the number growth of significant institutional investors, plus a substantial infusion of money that is foreign associated with several commercial real estate projects. These elements add to the possibility of wealth appreciation. 

Read Fractional Ownership And Its Impact On Commercial Real Estate.

Also, commercial Real Estate often consists of Grade-A properties frequently leased by MNCs, Banking Institutions, Warehouses, or IT firms with large budgets. In contrast to residential renters, such companies do not frequently leave the premises on short notice, putting the real estate owner in a predicament. A business space rental contract, but, is for three years or more. As a result, one advantage of renting land to commercial organizations is that there is timely payment of rent and design the entire space to their specifications. Furthermore, because they utilize the properties as offices, there is a devotion all of their efforts to keeping the space organized, and are inclined to extend their lease rather than seek a new location.

After receiving a deposit in their account every month and the market’s continuous rise, many parties interested want to put their money in Commercial Real Estate fractional shares.

So, what is fractional ownership in the India scenario?

Fractional real estate ownership or fractional ownership of real estate is still in its early stages in India. Although it is gaining popularity, it has yet to get recognized as a mainstream investment class akin to stocks and mutual funds. In India, the fractional ownership sector gets valued at $5 billion.

Commercial Grade Property Ownership includes office complexes, warehouses, and factories. Because of the high quantities of money necessary, commercial real estate has remained the realm of HNIs and Ultra HNIs. As a result, middle-income investors have just two options: volatile stocks or low-interest fixed deposits.

Because of fractional ownership, investing in high-quality commercial real estate assets becomes cheaper. Because of this concept of real estate investing, via fractional ownership India, Indians may own commercial property that fits their budgets. As a result, the monopoly of HNIs in commercial real estate investing gets broken.

The Future of Fractional Ownership India or Indian Real Estate: Fractional Ownership

Why invest in fractional real estate in India? While most of us are skeptical about the viability of fractional ownership in India or fractional real estate investment, other experts feel it is the future of Indian real estate in 5 years. So, below are some reasons why you should invest in fractional real estate.

  • Making real estate accessible to all: Commercial real estate has traditionally gotten very profitable. But due to the costs involved, middle-class investors seldom enjoy such high-yielding assets. Investors having a stake in a company can engage in high-end investments alongside HNIs.
  • Guaranteed asset appreciation and consistent growth: Commercial real estate is one of the few asset groups that recovered swiftly following the epidemic. While other real estate took a back seat during the epidemic, CRE and office leasing grew in India. Furthermore, MNCs establishing a presence in India have raised the demand for commercial real estate, making it a solid investment with potential asset appreciation and constant growth. Also read Fraction ownership: A Minimum investment maximum benefit opportunity.
  • Long-term lease: Commercial leases, unlike residential leases, are for lengthy periods, and tenants from MNCs or IT businesses tend to rent out premises for long periods or renew their leases and never fail on their payments. It assures a steady stream of passive revenue for you.
  • Decent IRRs: Fractional ownership guarantees returns and growing return rates in rental income and capital appreciation. Investors may expect a 15% increase in rental returns if they invest in a solid firm through a reputable platform. For example, Assetmonk provides Grade-A goods to its investors, on which they may easily earn IRRs ranging from 12% to 21%.
  • Zero hassle: Fractional investment for investors is a low-cost real estate investment that does not require maintenance efforts on its owners. Assetmonk, a real estate investment platform, simplifies the investing process even further by completing due research on the CRE and only bringing Grade-A investment proposals to the table. They also adhere to strict transparency and customer-first practices.

As a result of the extreme volatility and losses of the stock market, we have seen a substantial increase in investors wanting to invest in CRE and other high-value assets. Commercial real estate has long been an essential asset for institutional and ultra-high-net-worth people, and based on our previous experience, it may also get regarded as a recession-proof investment to some extent.

Individual investors can take advantage of these safe and secure investment options through fractional investing real estate and explore them for their benefit. Real estate can be very beneficial if approached strategically; fractional ownership of real estate can be a reliable investment for young people and senior citizens nearing retirement.

Assetmonk is a WealthTech Platform that offers fractional investing real estate or fractional real estate investment choices in Hyderabad, Chennai, and Bangalore and IRRs ranging from 14 to 21 percent. We provide three product categories where you can grow your money: Growth, Growth Plus, and Yield. Come and learn more about our asset offerings from our website and connect with our advisor to start a conversation. 

Fractional Ownership in India FAQ’S:

How long does fractional ownership last?

A regular timeshare product allows you to visit the property for one to two weeks each year. However, fractional ownership allows you for five weeks or more per year.

What are the benefits of fractional ownership?

Fractions ownership of real estate offers many benefits to the investor. These are.

  • A quick method to invest
  • Low investment, high reward
  • Consistent earning
  • Diversification of a portfolio
  • Market Stability

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