In India, 60 per cent of overall investors and 64 per cent of high networth individuals (HNI) prefer the fractional ownership model to invest in commercial real estate (CRE), according to WiseX’s neo-realty survey 2024.
Fractional ownership has emerged as a new investment model in India over the last couple of years, and CRE is a growing asset class that allows investors to generate steady passive rental income for the long term along with capital appreciation. Substantiating this, a recent report by Knight Frank stated that the market size of fractional ownership properties in India has grown by 65 per cent from 2020 and is soon to reach USD 8.9 billion by 2025.
Recent amendments in the regulations of REITs to include SM REITs also add to the confluence on the rise of fractional ownership. The WiseX survey of affluent investors shows that 60 per cent of investors who haven’t previously invested in fractional ownership believe regulatory support from Sebi has bolstered their confidence in Fractional ownership investments.
Although investing in commercial real estate has always been accessible, enhanced regulatory oversight has further solidified their trust.
The survey suggested that Bengaluru is the top preferred location for HNI investors (31 per cent) to make fractional ownership investments, followed by Pune (24 per cent); Mumbai (22 per cent) and Delhi NCR (13 per cent).
WiseX’s survey also revealed that 61 per cent of investors found equities to be the most rewarding in the last financial year, followed by innovative, new-age real estate investments like REITs and fractional ownership (45 per cent), mutual funds (39 per cent) and traditional real estate (35 per cent).
Moreover, 69 per cent of HNIs are planning to increase their investments in real estate opportunities, demonstrating a bullish outlook on the sector.
The survey also indicates that real fractional ownership investments through tech platforms offer a great track record of timely payments which makes it a foremost reason for high investment in these models. Of the investors who haven’t made a Fractional Ownership investment thus far, the biggest apprehension turned out to be liquidity concerns for about 30 per cent of investors. The survey revealed that the majority of investors favour real estate investments with a medium-term perspective of one to three years (20 per cent) and four to six years (55 per cent).
Aryaman Vir, Chief Executive Officer (CEO), WiseX said, “Over the last decade, the investment landscape in India has transformed demographics, technological progress, and there has been growth in individual disposable incomes. Investors are now increasingly open to exploring new investment options for better returns.”
He added that despite an inclination towards equities and mutual funds, there is growing evidence of interest in investing in real estate investments amongst investors as it is a stable asset class. As a leader in the fractional ownership industry, it is heartening to see the sentiment towards fractional ownership growing positively over the past three to four years.
He mentioned, “While Bengaluru, Pune, Mumbai & Delhi NCR are the leading markets for real estate investments in India, we continue to witness high demand for real estate investments from other tier 1 and 2 cities as well. We believe the recent Sebi approval on regularizing fractional ownership framework, along with reducing the minimum threshold of investment to Rs 10 lakh will further help in democratising real estate— a traditional asset class— to more investors.”
