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Investors have always been on the lookout for the next best thing in investment between crypto vs fractional ownership. An investment opportunity that provides low risk, high returns, and fiscal stability. Does that sound too good to be true, like a magical unicorn? Maybe not.
In today’s ever evolving investment landscape of alternative investments, most savvy investors have narrowed down on two popular options that have gained significant traction in the last few years: Cryptocurrency and investing in fractional ownership of real estate.
Both of these options are unique, offer a myriad of opportunities to grow your wealth, and come with their own benefits and risks. Not surprisingly, many risk-averse investors are looking for the best safe investment out of crypto vs fractional ownership of real estate to solidify their portfolios. Understanding the differences between the two is critical for making a smart investment.
Investing in Crypto Explained
Even though India doesn’t have formal regulations for investing in cryptocurrency, by 2024, the cryptocurrency market is expected to generate US$343.5 million in revenue, as per Statista.
Revenue is predicted to increase at a 7.99% compound annual growth rate (CAGR), reaching a projected total of US$467.2 million by 2028.
Often referred to as crypto, cryptocurrency is a digital or virtual currency. It employs cryptography for security and functions autonomously from a central authority – be that government, or a bank. Bitcoin, Ethereum, and Litecoin are some of the most infamous cryptocurrencies: each boasts its unique blockchain technology along with specific use cases.
With an understanding that the value of these digital assets may escalate over time, crypto currency investment is done by buying these digital tokens.
Cryptocurrency is notable for its volatility, the crypto market often witnesses significant price fluctuations and shifts, within a brief period of time.
Fractional Ownership Investment in Real Estate
Investing in fractional ownership of real estate is another popular alternative investment strategy. It involves owning a portion or fraction of a real estate asset instead of buying the entire asset outright.
The concept of fractional ownership investing as gained huge popularity in the last few years, by expanding the number of investors who can buy ownership stakes in high value properties with lower capital requirements.
The fractional ownership real estate market, while not new to the United States & Europe, is gaining steam in India.
As per data from Knight Frank, the fractional ownership sector in India is expected to grow by 65 percent, from $5.4 billion in 2020 to $8.9 billion in 2025, at an compound annual growth rate of 10.5%.
Per a Mordor Intelligence report, the fractional ownership market for commercial real estate is expected to bounce from USD 5.4 billion to USD 8.9 billion come 2025.
How Fractional Ownership Investing Works
Fractional ownership of commercial real estate typically works through fractional ownership platforms (FOPs) such as Assetmonk. Investors pool their funds to collectively purchase a property. In return, investors receive a proportional share of rental income and potential capital appreciation.
For example, investing in a 20 crore commercial property would be out of the reach of many eager investors, and only available to a few companies or high net worth individuals. Through fractional ownership of commercial real estate, investors can now invest in such trophy properties with as less as Rs 25 lakh rupees & gain shared ownership of the property.
Crypto vs Fractional Ownership Investing: An Overview
| Criteria | Cryptocurrency Investment | Fractional Ownership in Real Estate |
| Volatility | High volatility, with prices prone to rapid changes | Relatively stable, with less frequent price fluctuations |
| Asset Type | Digital assets with no physical presence | Tangible assets in the form of real estate properties |
| Ownership Structure | Full ownership of digital tokens | Partial ownership of real estate properties |
| Income Generation | Speculative gains; no regular income stream | Rental income from tenants and potential property appreciation |
| Market Liquidity | Highly liquid, enabling quick buying and selling | Less liquid, with potential delays in selling fractional shares |
| Investment Duration | Can be short-term or long-term | Generally long-term, with investors holding shares for several years |
| Risk Exposure | Subject to market volatility and regulatory risks | Exposure to real estate market fluctuations and economic conditions |
| Diversification Opportunities | Limited diversification within the crypto asset class | Opportunity to diversify across various real estate properties |
| Entry Capital Requirement | Varies widely; can start with small amounts | Minimum entry ticket often higher due to real estate’s high value; Rs 25 lakhs (Assetmonk) |
| Regulatory Environment | Evolving regulatory landscape with uncertainty | Has regulatory approval from SEBI in SEBI (Real Estate Investment Trusts) Regulations 2014 (REIT Regulations) |
| Expected Rate of Return | Highly variable, with potential for significant gains or losses | Relatively stable, expected returns of around 15%. Predictable income from rental yields and potential property appreciation |
How Crypto is Aiding Fractional Ownership
But did you know, that cryptocurrencies & blockchain technology have facilitated the growth of fractional ownership models. Crypto eliminates geographical barriers, and enables investors from around the world to participate in fractional ownership of real estate assets. Through blockchain-based platforms, investors can access a diverse range of commercial properties without the limitations of traditional real estate investment models. This global accessibility opens up new avenues for portfolio diversification and investment opportunities previously inaccessible to individual investors.
Move over crypto vs Fractional ownership, emerging FOPs leverage blockchain technology and cryptocurrencies to facilitate fractional ownership of real estate assets.
These entities use smart contracts self-executing agreements with terms directly encoded into the agreement – for automating and streamlining investments; this enables seamless transactions such as property acquisitions or distributions in rental income along with investor payouts.
Bottom Line
Fractional ownership has changed how the world looks at real estate investments. It is a paradigm shift, providing ease of access and potential for global growth through technological advancements. It’s a cornerstone of the modern diversified investment portfolio.
As the real estate sector in India grows, platforms that prioritise transparency, due diligence, and an overall good experience for investors will come to the front. At Assetmonk, we’ve embraced our role in shaping the future of fractional ownership in commercial real estate in India.
Fractional ownership of commercial real estate is all set to become a mainstream investment avenue. Investors who embrace this model stand to benefit from a more flexible and rewarding real estate investment experience in the years to come.
Assetmonk’s web based investment platform facilitates access to these opportunities. We also contribute to the evolution of the real estate sector, and are ready to guide investors in their fractional ownership journey.
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