Fractional ownership gaining high traction among investors in India; market touches Rs 4,000 crore, to grow at 25-30%

Fractional ownership of real estate is steadily gaining traction among investors, with assets under management now reaching Rs 4,000 crore, as indicated by a recent report by TruBoard Partners, a technology-enabled real asset management company.

Multiple private firms have established fractional ownership platforms that empower investors to possess a portion of real estate assets. The collective asset value in India's fractional ownership market, encompassing all these platforms, surged from Rs 1,500 crore in 2019 to Rs 4,000 crore in 2023, PTI quoted from the recent TruBoard report.

TruBoard Partner has projected a 25-30 per cent compounded annual growth rate (CAGR) in the AUM of the fractional ownership market over the next 4-5 years.

What is Fractional Ownership?

It typically involves dividing the ownership of a real estate asset among multiple investors. This approach reduces the need for substantial capital investments and makes it more accessible for a broader range of individuals to participate in real estate ownership.

Greater diversification of investment portfolio

Fractional Ownership allows investors to purchase a fraction of a large-scale property, facilitating greater diversification of their investment portfolios. Nayan Raheja, Raheja Developers further explained, "Spreading investments across different assets helps reduce risk and enhances the stability of an investment portfolio. This approach aligns with modern investment strategies, providing investors with more balanced and diversified options."

Tech-driven solutions help in easy monitoring

India's tech-enabled platforms are democratizing the potentially high-worth sector and young investors with monthly salaries are getting drawn towards it. The digitization of the real estate industry has made tracking fractional investments more convenient than ever. "Online platforms and technology-driven solutions enable investors to monitor their holdings, enhancing transparency and providing greater convenience. This level of transparency instill confidence among investors and simplifies the investment process," said Surender Kaushik, Managing Director, Aryan Realty Infratech Pvt Ltd.

How investors can contribute?

Investors contribute their funds to securities issued by a Special Purpose Vehicle (SPV) created by the fractional ownership platform. These platforms offer a structured channel that allows a group of people to pool their resources and collectively own real estate. Highlighting how it can be an attractive investment destination for Non-resident Indians (NRIs), Vikas Bhasin, Chairman and Managing Director of Saya Group said, "This hands-off approach relieves individual investors from the burdensome responsibilities of property management, allowing them to enjoy the benefits of real estate investment without the associated complexities. This professional management is particularly appealing to Non-resident Indian (NRI) investors looking for stable and rent-generating assets in their home country."