Fractional Ownership: Is it One of the Most Lucrative Investments Today?

By Consultants Review Team Monday, 30 October 2023

Today, if we look at the varied ways in which we can invest our capital upon, one of the most profitable techniques to investing nowadays is fractional ownership. While the concept of fractional ownership of real estate is still in its early stages in India, it is expected to grow in the next few years as a result of burgeoning technology-driven platforms, according to a recent TruBoard Partners report. According to projections, the fractional ownership business in India is expected to rise to Rs 4,000 crore this year. 

In a nutshell, fractional ownership allows investors to own a portion of a high-value property for a fraction of the cost of purchasing the entire property outright. Even small-budget investors can invest in and acquire shares in high-value properties in proportion to their investment. Furthermore, according to credible industry analysts, there are various advantages to fractional real estate ownership, including cost, diversification, and professional property management. In addition, another significant advantage of fractional ownership is that it is a more liquid investment than traditional real estate because shares can be sold at any moment. Shravan Gupta, Co-founder and CEO of Yours, a co-ownership service provider offering  a gamut of unique properties, stated, "Fractional ownership is a relatively new concept in India and is a smart way to invest in a second home." 

With plans to expand to new destinations in the near future, Yours currently provides co-ownership properties in Goa, Alibaug, and the Nilgiris. According to Gupta, fractional ownership allows people to buy a portion of a high-value property, such as a business building, vacation house, or luxury apartment, for a fraction of the cost of purchasing the entire property altogether.

"Each property is owned by a special purpose vehicle (SPV), which can have up to eight co-owners." Each share entitles you to one-eighth of the property's time or 45 days per year. In other words, one owns an asset rather than a timeshare," Gupta noted. While the shared ownership model in real estate is gaining traction among investors looking for alternative instruments, one of the most significant issues facing the fractional ownership industry in India is a lack of investor awareness and understanding.

Furthermore, many investors are unfamiliar with the concept and its advantages. According to experts, a lack of regulatory framework is also an impediment. The Securities and Exchange Board of India (SEBI) is considering a regulatory framework for fractional ownership as co-ownership of real estate gains traction.

Experts believe that the fractional ownership of real estate is the next big thing after the establishment of REITs in 2007, experts believe that fractional ownership of real estate is the next big thing, and a regulatory framework will help legitimize the industry and enhance investor trust. This new investment vehicle offers various alternatives to people and has the potential to deliver a huge boost to the Indian real estate sector, which is experiencing tremendous demand for high-value property.

According to industry experts, fractional ownership of real estate is quickly emerging as a potential investment instrument in India for investors, notably HNIs, and even end-users, and may let them generate consistent returns of 8-10% from the burgeoning real estate market. While co-ownership of high-end property is still in its early stages, various businesses have emerged in India to provide fractional ownership platforms for both commercial and residential assets. Experts predict that established firms in the real estate sector will soon follow suit.


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