Fractional Ownership is opening a myriad of avenues for new-age investors to participate in new opportunities at a fraction of the cost.
By Varun Mohan – Founder and CEO at Definite
The Indian commercial real estate sector has developed into a lucrative market for official investors and others. Numerous pro-investor policies and infrastructural growths are suggestively contributing to the sector’s extraordinary growth. Even during the pandemic-induced lockdown in 2020, the commercial realty segment in India remained resilient and picked up the pace of growth till the first quarter of 2021.
The preliminary phase of the pandemic weakened the gushes of the stakeholders. Though, with the ease in movement restrictions and economic activities, the sector embarked on a growth trajectory. According to a recent industry report, institutional investments in the Indian real estate sector grew by 21 per cent during the first quarter of 2021. Further, in the next quarter, the uncertainty caused due to the second wave of the pandemic put the sector on a temporary pause. But owing to the growth drivers of the sector, the investors’ continued interest will break the inertia soon.
Despite the short-term disruptions caused by the exacerbating impact of the pandemic, the Indian commercial realty segment is poised for a speedy recovery. Several institutional investors will continue to be bullish on commercial assets for resilient and long-term growth. Even during the pandemic, there was a steady flow of $4.8 billion investments in the sector, as per the recent data.
The growth in the commercial realty sector is pointed towards the integration of new-age technologies in the real estate sector. The set of technology-driven offerings and services by innovative PropTech platforms disrupts the conventional realty sector. Additionally, the emergence of prop-tech platforms is attracting unprecedented investments from investors looking for safe growth amid the pandemic. Besides, the global business climate, tech-enabled businesses and employment trends also make the office space market move on an upward trajectory.
Ownership of a commercial asset contributes to income and wealth generation. Until a few years ago, investing in a premium commercial space was not practical because of its high-ticket price. However, with the introduction of fractional ownership, a wider pool of institutional investors, individual investors, and fractional investors can jointly purchase A-Grade property.
Fractional Ownership is picking up the pace in India. It is opening a myriad of avenues for new-age investors to participate in new opportunities at a fraction of the cost. It works as a platform where individuals can get together to purchase a commercial asset, enjoy the yield it generates and finally be able to sell their fraction when they want, thus enjoying capital gains. Hence, the emerging trend of fractional ownership is significantly set to influence the Indian commercial realty segment. Investing in a commercial asset is the choice of experienced investors and has never been a thing of new-age investors. The years of experience and deep knowledge required to identify a profitable commercial asset makes it difficult for many investors to step on A-grade commercial properties. Hence, as a solution to have specialised knowledge, the right connections and access to a huge amount of capital, Fractional Ownership is the inevitable change coming to the commercial real estate market.
Further, PropTech platforms offering fractional ownership thoroughly sanitise each asset and use big data analytics, predictive algorithms and conservative financial model to provide a safe investment opportunity to fractional owners. As a result, commercial investors enjoy the opportunity of minimised risk with optimised returns from regular rental yield and capital appreciation. Investors in commercial realty strive for more opportunities that help them in creating wealth. This comes with the diversification of investments that also balances risks and rewards in their investments. With the integration of technology, prop-tech plays a crucial role in diversifying investors’ portfolios across asset classes and locations. This helps investors in getting access to transparent reporting with a dedicated focus on maximising their returns. Further, investors looking for a safe investment opportunity are capitalizing on real-time asset performance, payouts and financial models that work in the favour of investors.
Though there are endless ways to create income, owning a property will always be considered a long-term investment option. Considering the pace of digital adoption, PropTech is going to play an impressive role in revamping the conventional Indian commercial realty segment. It is projected to focus on fractional ownership to provide profitable investment opportunities to new-age investors.