Real estate's best kept secret investment tool

Imagine owning a luxurious vacation home amidst picturesque landscapes or an upscale commercial property in the heart of a bustling city. The allure of such prestigious assets has long captivated the aspirations of retail investors across India. However, budget constraints and the high costs of maintenance often act as barriers to turning these dreams into reality. Enter the latest buzz in India's real estate sector - Fractional Ownership - a paradigm shift in India's real estate market.

UNVEILING FRACTIONAL OWNERSHIP

Fractional ownership basically means an investor owning part of an asset, along with co-owners, so the cost of investment is divided among the investor group.

Each investor holds a direct ownership stake, which may include rights to a specific unit, portion, or time-sharing of the property. Unlike REITs, fractional ownership provides investors with the opportunity to invest in specific individual properties. This means they can have direct control over which assets they invest in.

Retail investors can easily invest in real estate under the fractional ownership system through fractional ownership platforms (FOPs).

THE GROWING APPEAL OF FRACTIONAL OWNERSHIP

The remarkable surge in popularity surrounding fractional ownership can be attributed to its unparalleled flexibility and diversification, aligning perfectly with the preferences of contemporary investors. One of the key draws of fractional ownership lies in the seamless and hassle-free experience it offers to investors. Entrusting rent collection and property maintenance to expert teams associated with FOPs, investors can enjoy a hands-off approach to ownership, freeing them from the burdens of day-to-day management. This aspect is particularly appealing to Non-Resident Indians (NRIs) and those who prefer a professionally managed environment, granting them the luxury of indulging in potential returns without being constrained by turnkey management responsibilities. Further, embracing the digital era, tracking investments and monitoring returns has never been easier. This provides investors with real-time insights into their portfolio's performance, making it even more lucrative.

THINGS TO CONSIDER

It is important to explore a few factors before investing in fractional ownership of real estate properties. First, financing options for such assets are restricted. Since not too many banks allow mortgages in such assets, investors may have to look for other financing paths to get the required funds. Moreover, fractional ownership involves joint ownership, where all the owners have to take decisions in every respect—from maintenance, repairs and so on—simultaneously.