Should you opt for fractional ownership of property or stocks in the current market scenario?

By: |
September 27, 2021 7:11 PM

Fractional ownership provides dual benefits to the investors in terms of monthly rentals and capital appreciation at the time of sale of the asset.

Fractional Ownership, Commercial real estate, assured rental income, real estate, Fractional Ownership, Fractional Ownership of Real Estate, legal framework, protect investors, REIT, small investors, SPV,The long lease agreements and lock-in ensure a steady flow of rental income for the investors.

Fractional ownership allows multiple investors to come together and purchase a stake in a high-value property through a special purpose vehicle. It is a new way of owning a property – With fractional ownership, one can get ownership of a property but in a simpler and more affordable way.

Experts say it is one of the attractive investment options as compared to other financial products present in the market.

Shiv Parekh, Founder of hBits, says, “Fractional ownership has opened up the opportunity for retail investors to benefit from high returns on the commercial real estate properties which were earlier far from accessible for them.”

Stable returns

While the earnings from the stock market are dependable on the market sentiments and vary with market fluctuations as seen in the current pandemic situation, this is not the case with fractional ownership. Fractional ownership offers stable returns over a longer period of time.

Parekh says, “Fractional ownership platforms allow investors to invest in pre-leased institutional-grade properties with MNC tenants. The long lease agreements and lock-in ensure a steady flow of rental income for the investors.”

Dual benefits in Fractional Ownership

Fractional ownership, experts say, provides dual benefits to the investors in terms of monthly rentals and capital appreciation at the time of sale of the asset.

Market research

While investing in the stock market, investors put in a lot of time in fundamental and technical research before investing in any stock. Parekh says, “Many a time lack of expertise leads to losses in investment in the stock market. Most fractional ownership platforms on the other hand are backed by real estate players with extensive experience and expertise in the real estate market which helps them to evaluate the correct price and yielding potential of the property.”

The properties listed on the fractional ownership platform go through a rigorous due diligence process to ensure high returns for the investors.

Diversification

Industry experts say fractional ownership allows investors to invest across properties that are located in different geographies, sectors having different clientele. Thus, Parekh points out, “there is no general correlation among the various properties.”

He further adds, “In the stock market even if the money is distributed among various stocks all the stocks are correlated to some degree with the broader market indices, thus perfect diversification is very difficult in the stock market.”

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