Owning a slice of premium real estate is no longer a distant dream for investors. Thanks to Fractional Ownership, retail investors can now access high-value real estate with lower upfront costs, earning rental income and capital appreciation along the way. This innovative model is opening doors to opportunities once reserved for the elite.
Democratising Access to High-Value Properties
Fractional ownership is changing how retail investors approach real estate. It allows them to co-own premium assets like office spaces, warehouses, and student housing. By sharing costs with other investors, they can invest in high-value properties without shouldering the full financial burden.
This concept is thriving in India, with options like REITs, SM REITs, online platforms, and direct deals from developers opening doors to more investors. Each model has its strengths—while REITs and SM REITs follow strict regulations, online platforms often offer flexible investment amounts suited to specific asset types.
Why Fractional Ownership Works for Modern Investors
Commercial assets are preferred for fractional ownership due to their strong yields, typically 6–9%. “In contrast, residential yields are two to three per cent unless the properties are used for student housing or holiday homes, where the yields are five to six per cent. Hence, the choice depends on one’s investment goals,” says Anand Moorthy, Co-Founder and CBO, Capital Market & Services, Square Yards.
While fractional ownership offers significant potential, it requires careful asset selection and management consideration. Moorthy emphasises the importance of expertise:
“However, retail investors often lack awareness of these aspects beyond property valuation. Therefore, choosing the right asset manager with proven experience in real estate investing is crucial, as they are likely to bring well-curated and high-quality products.”
How to Make Informed Investments
To maximise returns, investors need to review critical factors such as historical performance, rental yields, and occupancy rates of potential assets. Evaluating broader market trends, including micro-market insights, is essential for aligning investments with financial goals.
With the rising interest in sustainable investments, ESG-compliant or green-certified properties present an attractive option for retail investors seeking long-term value and market relevance.
Read more through the links below to uncover the key trends and market leaders driving this growth:
Outlook Money – https://bit.ly/3ZnKGkq
Published Date: 3 Dec, 2024
