These are the numerous investment opportunities available to NRIs in India. This article helps the NRIs to understand the different methods where they can be able to create tax-smart portfolio with their investments.
Fractional Ownership: A Perfect Solution to All Your Real Estate Concerns
Fractional ownership in real estate is a new concept in which individuals can pay a median amount of money to become owners of high-end commercial properties. It is gradually gaining traction as a modern real estate investment paradigm.
One of the many things this pandemic has taught us is the need for investing wisely since stock values collapsed and all investors could do was withdraw their money at a loss or wait impatiently for the prices to rise. Investors have recognized the value of diversifying their portfolios and investing in more stable asset groups.
Amid turbulent stock markets and reduced interest rates on FDs, an increasing number of consumers are turning to more reliable types of investment, such as real estate. At the same time, fractional ownership was growing in favor among Indian investors. Fractional ownership refers to portion ownership of an asset, most commonly commercial real estate assets with high returns.
Fractional ownership in Indian Real Estate Investments
In India, fractional ownership is still in its infancy and has yet to be recognized as a mainstream investment class, similar to equities and mutual funds, but it is gaining traction. To determine if this investment model will be successful in the future, we must first assess its current state. While the concept is still relatively new, the fractional ownership sector in India is believed to be worth $ 5 billion.
Grade-A commercial estate in India comprises office buildings, warehouses, industries, and co-living spaces. Because these need large sums of money, CRE has remained exclusive to HNIs and Ultra HNIs. Middle-class investors are now forced to pick between extremely volatile stocks and low-interest fixed deposits.
Fractional ownership makes investing in top-tier commercial real estate assets affordable and simple, which is exactly what Indian investors have been waiting for. Through this notion of real estate investments, Indians can own commercial property based on their budget, which also helps to break the monopoly of HNIs in the realm of Commercial Real Estate Investment.
Challenges of Fractional Ownership In Real Estate Investments
Because it is still a new concept in India, an investor should take cautious risks rather than dive in blindly. Due to the lack of a standardized approach, investors must engage with companies whose terms and conditions are acceptable to them. As fractional ownership grows in popularity in India, the government will most likely want to address the issues and develop investment rules governing the use of the fractional property. Until then, both parties must choose a path that is beneficial to both of them.
Fractional Ownership as the future of Indian Real Estate Investments
While most of us wonder whether fractional ownership would survive in India, other experts feel it is the future of Indian real estate. Here’s why:
Making housing more affordable
Commercial real estate has always been thought to be highly profitable, but due to the costs involved, middle-class investors rarely enjoy such high-yielding assets. Investors with fractional ownership can participate in high-end investments alongside HNI investors.
Asset appreciation and consistent growth are guaranteed
Commercial real estate is one of the few asset groups that quickly recovered following the epidemic. While other types of real estate took a back seat during the epidemic, CRE and office leasing grew in India. Furthermore, MNCs establishing operations in India have increased demand for CRE, making it a dependable investment with potential asset appreciation and consistent growth.
Unlike residential leases, commercial leases are for lengthy periods, and tenants from MNCs or IT businesses tend to rent out spaces for longer periods or renew their leases and never default on their payments. This assures a steady stream of passive revenue for you.
IRRs that are reasonable
Fractional ownership not only guarantees respectable returns but also guarantees increasing return rates in both rental yield and capital appreciation. Investors can expect a 15% increase in rental returns if they invest in a solid firm through a reputable platform. For example, Assetmonk provides Grade-A products to its investors, on which they can easily earn IRRs ranging from 12% to 21%.
Invest without complications
Fractional investment, designed specifically for today’s investors, is a low-cost real estate investment that does not necessitate any time or maintenance efforts on the part of its owners. Assetmonk, a real estate investment platform, simplifies the investing process even further by completing due diligence 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 stock market’s extreme volatility and losses, we have seen a substantial increase in investors looking 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 individuals, and based on our previous experience, it can also be regarded as a recession-proof investment to some extent.
Individual investors can take advantage of these safe and secure investment choices through fractional ownership and explore them for their gain. Real estate can be quite advantageous if treated wisely; fractional ownership may be a terrific and very stable investment for both young people and senior persons nearing retirement. This partial ownership, we may even say, is here to stay. Assetmonk is a WealthTech Platform offering fractional investment opportunities in Hyderabad, Chennai, and Bangalore with an IRR of 14-21%. The products offered by us are categorized as Growth, Growth Plus, and Yield. Visit us to know more about our offerings.
Fractional Ownership FAQ'S:
Fractional real estate ownership is a percentage interest in a real estate asset. Individual owners purchase such assets and share the asset’s benefits such as usage rights, income sharing, priority access, and lower rates. Individual shareholders share the cost of an asset.
Multiple people can possess the same property but have different interests in it. For you and your partner, the house will be your primary residence — at least for the time being — and as such, it will be classified as residential (i.e., owner-occupied) rather than an investment.