Reasons why NRIs are moving to Indian Commercial Real Estate ✓ Growing market ✓ Urban development policies ✓ Growing demand for office spaces ✓ MNCs in India ✓ Government reforms in favor of Foreign Investors
Fractional Ownership And Its Impact On Commercial Real Estate
The emergence of fractional ownership in India was a ray of hope to many investors during the onset of COVID-19, precautionary-induced lockdowns and the subsequent economic descent. The idea of fractional ownership aims at providing a fair chance of investment in mega commercial projects to all investors, which can impact the real estate sector as we know it today.
Property ownership has always been an undisputed marker of one’s wealth and social reputation in cultures across the world for a very long time. While real estate is perceived as a profitable investment, it is worth mentioning that there do exist other, much better real estate investment options that you can enjoy. And as real estate trends rapidly change, it is time that we rethink asset ownership.
Why Is Fractional Ownership In Commercial Real Estate Growing So Fast?
Fractional ownership is a model where multiple unrelated investors come together to purchase a commercial real estate Grade-A property and share the risks and profits. The reason this system is gaining rapid popularity is-
- Autonomous System
Previously, only high net worth investors or institutional investors could have accessed premium real estate investments. But with advancements in technology, experts are coming up with creative solutions to break down the dominance of one type of investor and create a democratic environment where all investors can enjoy high-end investments.
- Lessons from the pandemic
Fractional ownership investment in commercial real estate is still a new idea for Indian investors. Despite that, the market is steadily rising in India; expected to grow by 16% in the next 5 years. The CRE market truly aced the test of the pandemic. Although it was affected by the pandemic, CRE has gained many investors’ trusts as a reliable investment, in comparison to stocks and mutual funds that dwindled dramatically.
- Demand for workspace
As MNCs shift bases to India from other countries or embark on establishing themselves in this country, there will be a rising demand for offices and workspaces, requiring a high supply of said assets. Hence, a lot of investment and scope for income generation.
As CRE is usually leased out to Banks and MNCs, it makes investing reliable. These institutions don’t just lease out the property for longer durations, but they also pay the rent on time and are more likely to renew their leases. All these aspects would ideally make this the perfect source of passive income generation for any investor. Some of the best fractional ownership properties include Banks, MNCs, multistory retail shops, etc.
- Liquidity and Transparency
Now that we know that fractional ownership investment can be a great long-term solution to generate a passive income, another question that many investors have is regarding the liquidity of the asset. A highly liquid asset is an ideal asset. While cash is the most liquid asset, commercial properties have been deemed illiquid. Assetmonk, however, provides assets that have high liquidity and makes sure that the transactions are transparent and nothing is hidden from the investor.
Fractional Ownership In Commercial Real Estate, Post-Pandemic
The pandemic was an eye-opener for many investors, and people have now started moving towards more reliable forms of investments than stocks and mutual funds. We can say that the pandemic even acted as an impetus for investors to consider real estate investment. Indians and NRIs alike have started taking a keen interest in Fractional real estate, which won’t be passing anytime soon.
However, the lack of rules and laws related to fractional ownership might be a problem in near future, as there are currently no rules and regulations
When we compare fractional ownership with other forms of real estate investments, it becomes clear that fractional ownership is emerging as a newer, more relevant, and practical form of investment. This can be owed to the lower acquisition and operating costs and helping investors diversify their portfolios. But an essential aspect of such investments is to invest through safe and reliable platforms. Providing high liquidity and IRRs is the bare minimum that any company must provide.
Quality assuring companies such as Assetmonk promise transparency in transactions, Assetmonk also offers an IRR of 12-21% and performs due diligence and other important procedures on behalf of the investors to make your investment experience better.
Fractional ownership is an investment model where a group of investors pools their assets to fund a commercial real estate property. They share the expenses and profit related to the asset.
You can easily find great fractional ownership deals on real estate investment platforms. You can also find great properties on our website.
Fractional ownership is high-end deals with high returns at comparatively lower investment capital required. There are several benefits such as high liquidity of assets, it also reduces the financial burden from one investor and distributes it amongst all investors.