Fractional Ownership of Real Estate Gathers Steam

Fractional ownership of real estate is gathering steam among investors, with assets under management (AUM) now touching Rs 4,000 crore, as highlighted by a report.

There are quite a few private entities that have established fractional ownership platforms that allow investors to possess a portion of real estate assets. The collective asset value in the country’s fractional ownership market, encompassing all these platforms, jumped from Rs 1,500 crore in 2019 to Rs 4,000 crore in 2023. 

The report projects a 25-30% compound annual growth rate (CAGR) in the AUM of the fractional ownership market in the next four to five years.

Typically, fractional ownership involves dividing the ownership of a real estate asset among a large number of investors. As a result, the need for substantial capital investments reduces due to this approach and makes it more accessible for a broader range of individuals to participate and gain through real estate ownership.

With fractional ownership, an investor is able to purchase a fraction of a large-scale property. This facilitates greater diversification of their investment portfolios.

The country’s tech-enabled platforms are acting as a disruptor in the potentially high-worth domain. It has significantly piqued the interest of young investors.

Moreover, tracking fractional investments has become relatively easier with the digitisation of the realty industry. 

A Special Purpose Vehicle (SPV) developed by the fractional ownership platform issues securities to which investors contribute their funds. While offering a structured channel, these platforms allow a group of individuals to pool their resources and collectively become owners of a real estate asset.