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	<title>Fractional ownership Archives - Square Feat India</title>
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	<title>Fractional ownership Archives - Square Feat India</title>
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	<item>
		<title>Survey Reveals 57% of Investors Favor Steady Rental Yields in Fractional Real Estate Ownership</title>
		<link>https://squarefeatindia.com/survey-reveals-57-of-investors-favor-steady-rental-yields-in-fractional-real-estate-ownership/</link>
		
		<dc:creator><![CDATA[SquareFeatIndia]]></dc:creator>
		<pubDate>Tue, 22 Oct 2024 11:58:27 +0000</pubDate>
				<category><![CDATA[Realty]]></category>
		<category><![CDATA[Affordable housing]]></category>
		<category><![CDATA[Fracspace]]></category>
		<category><![CDATA[Fractional ownership]]></category>
		<category><![CDATA[middle-class investors]]></category>
		<category><![CDATA[property co-ownership]]></category>
		<category><![CDATA[property management]]></category>
		<category><![CDATA[real estate investment]]></category>
		<category><![CDATA[steady rental yield]]></category>
		<guid isPermaLink="false">https://squarefeatindia.com/?p=8072</guid>

					<description><![CDATA[<p>A survey conducted by Fracspace found that 57% of investors prioritize steady rental yields in fractional real estate ownership, reflecting a shift towards affordable and flexible investment options. The results reveal that middle-class investors are increasingly drawn to co-ownership models for their potential financial security and ease of management.</p>
<p>The post <a href="https://squarefeatindia.com/survey-reveals-57-of-investors-favor-steady-rental-yields-in-fractional-real-estate-ownership/">Survey Reveals 57% of Investors Favor Steady Rental Yields in Fractional Real Estate Ownership</a> appeared first on <a href="https://squarefeatindia.com">Square Feat India</a>.</p>
]]></description>
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<p class="wp-block-paragraph">A recent survey by Fracspace, a prop-tech startup specializing in fractional real estate ownership, sheds light on the factors driving investor interest in co-ownership models. The findings indicate a rising demand for affordable and flexible property investment solutions, particularly among middle-class investors looking for alternatives to the financial challenges of traditional real estate ownership.</p>



<p class="wp-block-paragraph">According to the survey, 57% of respondents cited steady rental yield as their primary motivation for choosing fractional ownership. This preference underscores a strong interest in reliable, income-generating investments that offer financial security without the burdens associated with full property ownership.</p>



<p class="wp-block-paragraph">The survey also highlighted other motivations for investing in fractional ownership. Notably, 21% of participants expressed interest in the ability to own shares in multiple properties, allowing for greater portfolio diversification across various regions. Additionally, 11% appreciated the hassle-free property management provided by Fracspace, while another 11% valued the opportunity to enjoy luxury vacations at prime locations through their property shares.</p>



<p class="wp-block-paragraph">Unnath Reddy, Founder of Fracspace, commented on the survey results, stating, “These findings reaffirm our commitment to making property ownership accessible and hassle-free. Investors are clearly valuing the stability of steady rental yields and the flexibility to diversify their investments. Our co-ownership model bridges the affordability gap, making real estate a viable option for the middle class. We are dedicated to innovating further to ensure our clients can confidently invest in prime properties with ease.”</p>



<p class="wp-block-paragraph">As fractional ownership continues to gain traction, these insights reflect the evolving preferences of modern real estate investors. Fracspace’s innovative co-ownership model positions the company to meet the increasing demand for accessible, profitable, and manageable property investments, enabling individuals to achieve their real estate aspirations without the financial burden of sole ownership.</p>



<p class="wp-block-paragraph">Also Read: <a href="https://squarefeatindia.com/fractional-ownership-vs-traditional-real-estate-a-comparative-analysis/">Fractional Ownership vs. Traditional Real Estate: A Comparative Analysis</a></p>
<p>The post <a href="https://squarefeatindia.com/survey-reveals-57-of-investors-favor-steady-rental-yields-in-fractional-real-estate-ownership/">Survey Reveals 57% of Investors Favor Steady Rental Yields in Fractional Real Estate Ownership</a> appeared first on <a href="https://squarefeatindia.com">Square Feat India</a>.</p>
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		<item>
		<title>Fractional Ownership vs. Traditional Real Estate: A Comparative Analysis</title>
		<link>https://squarefeatindia.com/fractional-ownership-vs-traditional-real-estate-a-comparative-analysis/</link>
		
		<dc:creator><![CDATA[SquareFeatIndia]]></dc:creator>
		<pubDate>Tue, 10 Sep 2024 10:31:48 +0000</pubDate>
				<category><![CDATA[Realty]]></category>
		<category><![CDATA[Diversification]]></category>
		<category><![CDATA[financial planning]]></category>
		<category><![CDATA[Fractional ownership]]></category>
		<category><![CDATA[Investment Comparison]]></category>
		<category><![CDATA[Investment Strategies]]></category>
		<category><![CDATA[property investment]]></category>
		<category><![CDATA[real estate investment]]></category>
		<category><![CDATA[Real Estate Portfolio]]></category>
		<category><![CDATA[real estate trends]]></category>
		<category><![CDATA[Traditional Real Estate]]></category>
		<guid isPermaLink="false">https://squarefeatindia.com/?p=7738</guid>

					<description><![CDATA[<p> Investing in real estate can be approached through fractional ownership or traditional methods. Fractional ownership offers lower entry costs, diversification, and professional management, while traditional real estate requires substantial capital and involves direct management. Discover which investment model suits your financial goals and preferences.</p>
<p>The post <a href="https://squarefeatindia.com/fractional-ownership-vs-traditional-real-estate-a-comparative-analysis/">Fractional Ownership vs. Traditional Real Estate: A Comparative Analysis</a> appeared first on <a href="https://squarefeatindia.com">Square Feat India</a>.</p>
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<p class="wp-block-paragraph"><strong>By Aditya Kushwaha, CEO and Director Axis Ecorp</strong></p>



<p class="wp-block-paragraph">Investing in real estate has long been a favoured strategy for building and diversifying investment portfolios. However, for many beginners, traditional investment options like stocks, bonds, and mutual funds can seem intimidating and difficult to access. A new and innovative alternative, fractional ownership, is emerging as a unique way for investors to diversify their portfolios and access assets that were previously beyond their reach.</p>



<p class="wp-block-paragraph"><strong>Fractional Investment Option and its benefit</strong></p>



<p class="wp-block-paragraph">Fractional property investment allows individuals to own a share of a property without the need to purchase the entire asset. This approach enables investors to diversify their real estate holdings and invest in high-value properties that might otherwise be out of their financial reach. It provides a strategic advantage by lowering the entry barrier to real estate investment by requiring less initial capital than purchasing a whole property. This model allows for diversification across various assets and asset classes, effectively mitigating risk while potentially boosting returns. It also benefits from professional management, which ensures assets are maintained and overseen by experienced professionals, relieving investors of operational burdens. Additionally, fractional ownership grants access to high-value assets, such as premium properties and collectables, that would typically be beyond reach. The increased liquidity in fractional shares further enhances flexibility, making it a compelling alternative to traditional real estate investment.</p>



<p class="wp-block-paragraph"><strong>Traditional Real Estate Investment</strong></p>



<p class="wp-block-paragraph">Traditional real estate investment involves purchasing a property outright, whether residential or commercial, to rent it out or sell it for a profit. This type of investment typically requires substantial capital and entails ongoing management and maintenance responsibilities. Investors in traditional real estate maintain full control over their investment decisions, allowing for autonomy in managing their assets. This sector has a proven track record of delivering returns over the long term, making it a reliable option for building wealth.</p>



<p class="wp-block-paragraph"><strong>Making the Right Investment Choice</strong></p>



<p class="wp-block-paragraph">Choosing between fractional property investment and traditional real estate largely depends on an investor’s goals, time availability, experience, and financial resources. Fractional ownership offers a flexible approach to diversifying real estate holdings with a smaller financial commitment, making it an attractive option for many. It allows people to realize their homeownership dream with limited capital and earn rental yields.  Keeping these merits in mind, many young investors are now choosing the fractional ownership model. </p>
<p>The post <a href="https://squarefeatindia.com/fractional-ownership-vs-traditional-real-estate-a-comparative-analysis/">Fractional Ownership vs. Traditional Real Estate: A Comparative Analysis</a> appeared first on <a href="https://squarefeatindia.com">Square Feat India</a>.</p>
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		<title>New Frontier in Real Estate Investment: Unlocking the Potential through Fractional Ownership</title>
		<link>https://squarefeatindia.com/new-frontier-in-real-estate-investment-unlocking-the-potential-through-fractional-ownership/</link>
		
		<dc:creator><![CDATA[SquareFeatIndia]]></dc:creator>
		<pubDate>Tue, 23 Jul 2024 12:19:06 +0000</pubDate>
				<category><![CDATA[Realty]]></category>
		<category><![CDATA[Fractional ownership]]></category>
		<category><![CDATA[fractional real estate realty]]></category>
		<category><![CDATA[fractional realty]]></category>
		<category><![CDATA[Maharashtra Real Estate Regulatory Authority]]></category>
		<category><![CDATA[Mumbai]]></category>
		<category><![CDATA[Mumbai Real Estate]]></category>
		<category><![CDATA[Real Estate]]></category>
		<category><![CDATA[real estate fractional]]></category>
		<guid isPermaLink="false">https://squarefeatindia.com/?p=7469</guid>

					<description><![CDATA[<p>KPMG in India and CREDAI has released a thought leadership report titled “The&#8230;</p>
<p>The post <a href="https://squarefeatindia.com/new-frontier-in-real-estate-investment-unlocking-the-potential-through-fractional-ownership/">New Frontier in Real Estate Investment: Unlocking the Potential through Fractional Ownership</a> appeared first on <a href="https://squarefeatindia.com">Square Feat India</a>.</p>
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<p class="wp-block-paragraph">KPMG in India and CREDAI has released a thought leadership report titled “<a>The New Frontier in Real Estate Investment: Unlocking the Potential through Fractional Ownership”. </a>This comprehensive analysis sheds light on the transformative potential of Small and Medium Real Estate Investment Trusts (SM REITs) in reshaping the investment landscape for real estate in India. This report explores the emerging trends in <a>fractional ownership where this innovative model allows multiple investors to own high-value Grade A properties with smaller investments, democratizing access to real estate.</a><strong><em></em></strong></p>



<p class="wp-block-paragraph">In a groundbreaking move, the <a>Securities and Exchange Board of India (SEBI) has introduced amended regulations for SM REITs, opening the door for retail investors to participate in high-value real estate assets with a minimum investment of INR10 lakhs.</a> This initiative enables a diverse group of investors to collectively own units of premium properties, providing access to real estate assets.</p>



<p class="wp-block-paragraph"><a>The rise of SM REITs is expected to create a ripple effect across the real estate industry, by offering developers an efficient exit strategy and enabling reinvestment of capital into new ventures, fostering sustained growth in the sector</a>, which is one of the largest employers in the country. As per the Fractional Ownership Platforms (FoPs), the increased liquidity and flexibility offered by SM REITs also enhance the attractiveness of real estate as an investment class, potentially leading to healthier returns, depending on the asset class, locations, tenant profile, size of the project.</p>



<p class="wp-block-paragraph">While the potential of SM REITs is immense, the <strong>report also highlights the inherent challenges and risks associated with fractional ownership</strong>. Liquidity concerns (relative), somewhat less favorable tax regime compared to regular equity investments, and the need for consensus among co-owners are critical factors that necessitate careful consideration and strategic management. SEBI’s regulatory framework, which mandates a minimum 5/15 percent units in the scheme of SM REIT to be held by FOPs/IM (depending on leverage), aims to safeguard investor interests and bolster confidence.</p>



<p class="wp-block-paragraph">Driven by the rising demand for residential (rental) and commercial real estate, the anticipated surge in demand is expected to unlock opportunities for a broader spectrum of investors, driving growth, and fostering innovation in the real estate sector.</p>



<p class="wp-block-paragraph">“India’s real estate sector is at the brink of a revolutionary transformation, driven by urbanization, economic growth, and technological advancements. Fractional ownership is redefining investment paradigms, enabling retail investors to partake in high-value properties with a minimum investment of INR10 Lakhs. While this model offers significant potential, navigating its inherent challenges requires thoughtful deliberation and robust regulatory oversight. Moving forward, the sector’s resilience and adaptability will hinge on innovative solutions that navigate these complexities while harnessing the sector’s growth potential. The synergy between innovative investment platforms and regulatory frameworks will be more pivotal than ever in shaping a dynamic and resilient real estate market.” – <strong>Chintan Patel, Partner – Deal Advisory & Head – Building, Construction and Real Estate, KPMG in India.</strong></p>



<p class="wp-block-paragraph">“The Indian office market has consistently showcased significant resilience and delivered strong performance. This surge in demand is closely tied to the rising popularity of co-working spaces and fractional ownership opportunities in India. With SEBI overseeing regulatory matters, it facilitates dual objectives: strengthening investor confidence and enhancing transparency, thereby bolstering the security and liquidity of fractional ownership investments. The fractional ownership model offers a redefinition of traditional property ownership, with healthy returns, easy monitoring and diversification benefits – all contributing to its increasing popularity.”<strong> – Boman R Irani, President – CREDAI</strong></p>



<p class="wp-block-paragraph">Also Read: <a href="https://squarefeatindia.com/at-usd-2-5-billion-q2-2024-institutional-investment-in-indian-real-estate-touches-a-3-year-high/">At USD 2.5 Billion, Q2 2024 institutional investment in Indian real estate touches a 3-year high</a></p>
<p>The post <a href="https://squarefeatindia.com/new-frontier-in-real-estate-investment-unlocking-the-potential-through-fractional-ownership/">New Frontier in Real Estate Investment: Unlocking the Potential through Fractional Ownership</a> appeared first on <a href="https://squarefeatindia.com">Square Feat India</a>.</p>
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		<title>SEBI advocates regularization of Fractional Ownership Platforms</title>
		<link>https://squarefeatindia.com/sebi-advocates-regularization-of-fractional-ownership-platforms/</link>
		
		<dc:creator><![CDATA[SquareFeatIndia]]></dc:creator>
		<pubDate>Fri, 03 May 2024 12:00:00 +0000</pubDate>
				<category><![CDATA[Realty]]></category>
		<category><![CDATA[Fractional ownership]]></category>
		<category><![CDATA[real estate fractional]]></category>
		<category><![CDATA[SEBI]]></category>
		<category><![CDATA[Sebi real estate]]></category>
		<guid isPermaLink="false">https://squarefeatindia.com/?p=7289</guid>

					<description><![CDATA[<p>·       Currently, over 200 million sq ft of Grade A office stock, 28%&#8230;</p>
<p>The post <a href="https://squarefeatindia.com/sebi-advocates-regularization-of-fractional-ownership-platforms/">SEBI advocates regularization of Fractional Ownership Platforms</a> appeared first on <a href="https://squarefeatindia.com">Square Feat India</a>.</p>
]]></description>
										<content:encoded><![CDATA[
<p class="wp-block-paragraph">·       Currently, over 200 million sq ft of Grade A office stock, 28% of total office stock accounts for strata sold form of fractional ownership</p>



<p class="wp-block-paragraph">·       SEBI push pivotal in enhancing liquidity of INR 40 billion of real estate asset under fractional ownership platforms</p>



<p class="wp-block-paragraph">·       FOPs upon listing, will witness democratization of ownership; unitholders base may witness 20x growth in next 4-5 years</p>



<p class="wp-block-paragraph"><strong>With Securities and Exchange Board of India (SEBI) formulating detailed guidelines for Small and Medium REITs (SM-REITs), a large number of erstwhile unregistered Fractional Ownership Platforms (FOPs) for real estate assets are expected to get listed as SM REITs.</strong> This will effectively have the potential to regularize underlying real estate assets to the tune of over <strong>INR 40 billion </strong>in the near to midterm. With an effective regulatory framework in place, the liquidity of assets under fractional ownership is likely to get enhanced and can command significant traction in equity markets.</p>



<p class="wp-block-paragraph">It is worthwhile to iterate that fractional ownership of real estate assets can be broadly in form of two modes – either through direct ownership by developers (Strata sale model in case of commercial realty and web-based Fractional Ownership Platforms) or through the stock markets (REITs and SM REITs). While direct ownership enables developers to tap multiple asset buyers at a larger level, FOPs and SM REITs facilitates the eventual ownership by small scale investors at the retail level. Interestingly, even though residential, warehousing, agro-farms and retail assets come under the anvil of various web-based platforms, the current FOP universe is dominated by commercial office spaces.</p>



<p class="wp-block-paragraph">The recent SEBI guidelines will be beneficial in regulating the fractional ownership market and increase retail participation. FOPs will ultimately find it prudent to list as SM REITs and gain access to granular level of funding. From an asset owner perspective, an eventual listing will lead to increase in fair value of assets, democratisation of ownership and reduction in transaction costs during exit.</p>



<p class="wp-block-paragraph"><em>“SM REITs will not only foster retail investors’ interest in the real estate sector but will ensure investment portfolio diversification in a regulated environment. Aspects like reduction in minimum investment amount, mandatory manager holding period, and 95% presence of income generating assets will make SM REITs more endearing to the informed investor. Interestingly<strong>, the number of unitholders for the three office REITs in India have shown an annual growth of 60-80% since listing.</strong> On similar lines, SM REITs have a potential to witness an increase in ownership base by up </em><em>to 20 times in the next 4-5 years. Altogether, Indian realty sector will witness fractional ownership being established as a promising alternative investment avenue in the coming years.” said <strong>Badal Yagnik, Chief Executive Officer, Colliers India.</strong></em></p>



<p class="wp-block-paragraph"><strong>Fractional ownership in CRE: Strata sale Grade A office stock to cross 260 million sq ft by 2026, translating into a valuation of around INR 4,500 billion</strong></p>



<p class="wp-block-paragraph">Strata sale form of fractional ownership is mostly prevalent in office buildings. <strong>As of March 2024, office market in top six cities of the country hold over 200 million sq. ft of Grade A strata sale stock, constituting 28% of total Grade A office stock. </strong>Mumbai followed by Delhi NCR are the leading cities in terms of quantum and strata penetration. 40-50% of their respective overall office stock is strata sold.</p>



<p class="wp-block-paragraph"><strong>City-wise strata sold stock and penetration as of March 2024</strong></p>



<figure class="wp-block-table"><table><tbody><tr><td><strong>City</strong></td><td><strong>Strata Sold Stock (in million sq ft)</strong></td><td><strong>Strata Penetration (%)</strong></td></tr><tr><td>Mumbai</td><td>60.3</td><td>49%</td></tr><tr><td>Delhi NCR</td><td>55.6</td><td>41%</td></tr><tr><td>Bengaluru</td><td>40.3</td><td>19%</td></tr><tr><td>Hyderabad</td><td>22.4</td><td>21%</td></tr><tr><td>Chennai</td><td>12.9</td><td>16%</td></tr><tr><td>Pune</td><td>10.6</td><td>15%</td></tr><tr><td><strong>Pan India</strong></td><td><strong>202.1</strong></td><td><strong>28%</strong></td></tr></tbody></table></figure>



<p class="wp-block-paragraph">Source: Colliers</p>



<p class="wp-block-paragraph">Data pertains to Grade A office buildings</p>



<p class="wp-block-paragraph">Strata penetration refers to strata sold stock as % of overall Grade A office stock of respective city</p>



<p class="wp-block-paragraph">Of the ~200 million sq ft of Grade A properties under the Strata sale model, it is estimated that only 10-20% office assets are currently being offered by FOPs that are accessible to the retail investor. <strong>A vast majority of commercial asset developers are yet to fully tap the potential investment coming in from small scale retail investor. Colliers predicts that strata stock in top six cities in India will swell to 260-270 million sq ft in next two years, with an estimated market value of around INR 4,500 billion.</strong> As SM REITs will gain more popularity, the share of commercial assets accessible to the retail investor will also increase in the future. Fractional ownership of commercial real estate is set for a boost and the SEBI’s veil is likely to accentuate the transition of existing FOPs, especially ones within the office segment into SM REITs in the future.</p>



<p class="wp-block-paragraph"><strong>Fractional ownership activity varies across cities, to pick up significant pace albeit by varying magnitudes</strong></p>



<p class="wp-block-paragraph">Interestingly, in Delhi NCR, strata sale is the most popular form of fractional ownership of office assets wherein developers offer office floors or even entire buildings to multiple owners. With about 55 million sq ft of office strata sold stock, the region accounts for the second highest share across the top six cities. However, web-based FOP activity is quite low in the region and very few office buildings have been put up for retail investment by major FOP operators. However, with a regulatory framework in place, the region holds huge potential for offering fractional ownership of office assets through web-based FOPs/SM REIT and attract retail investments in the next few years.</p>



<p class="wp-block-paragraph"><strong>City-wise Fractional ownership activity (as of March 2024)</strong></p>



<figure class="wp-block-table"><table><tbody><tr><td><strong>City/Fractional ownership channel</strong></td><td><strong>Web-based platform activity*</strong></td><td><strong>Strata sale activity</strong></td><td><strong>REIT activity</strong></td></tr><tr><td>Mumbai</td><td>High</td><td>High</td><td>Medium</td></tr><tr><td>Bengaluru</td><td>High</td><td>Medium</td><td>High</td></tr><tr><td>Delhi NCR</td><td>Low</td><td>High</td><td>High</td></tr><tr><td>Hyderabad</td><td>Medium</td><td>Medium</td><td>Medium</td></tr><tr><td>Chennai</td><td>Medium</td><td>Low</td><td>Low</td></tr><tr><td>Pune</td><td>Low</td><td>Low</td><td>Medium</td></tr></tbody></table></figure>



<p class="wp-block-paragraph">Source: Colliers</p>



<p class="wp-block-paragraph">Data pertains to Grade A office buildings</p>



<p class="wp-block-paragraph">*The above activity matrix covers only Grade A commercial office assets</p>



<p class="wp-block-paragraph">Note: High Activity: Above 20%; Medium Activity: Between 10-20%; Low Activity: Below 10% <em>(Current activity is percentage share of each city in area managed by respective fractional ownership channel)</em></p>



<p class="wp-block-paragraph"><em>“Within the fractional ownership ecosystem, commercial real estate segment holds significant growth potential.  Grade A strata sale stock is likely to rise from the current levels of around 200 million sq ft to over 260 million sq ft by 2026. <strong>Correspondingly, the market value of strata sale Grade A commercial developments is poised to reach ~INR 4,000 – 4,500 billion in next three years from the existing ~ INR 2,500 – 3,000 billion level.</strong> Furthermore, higher quantum of commercial office assets is likely to be listed as SM REITs to tap the full market potential while enhancing tradability of erstwhile closely held assets. This has the potential to be a win-win situation for leading commercial developers and retail investors targeting comparatively higher, stable and assured real estate returns” said <strong>Vimal Nadar, Senior Director & Head of Research, Colliers India.</strong></em></p>



<p class="wp-block-paragraph"><strong>Regulated fractional ownership of real estate to expand beyond commercial real estate</strong></p>



<p class="wp-block-paragraph">A well-regulated market of fractional ownership will attract a larger number of investors across various asset classes. SM REITs will attract a larger number of investors for co-ownership of prime commercial offices, thus bringing in more funds to manage and upgrade office assets as per international standards. In the residential segment, post covid-19, there is an increased investor preference of owning villas and luxury apartments as second homes in the popular tourist destinations. In the coming years, premium residential properties in the major offbeat destinations like Alibaug, Lonavala, Goa, Kodagu, Rishikesh and Shimla, is likely to see rising demand. Fractional ownership market is also likely to diversify in other alternative asset classes like industrial & warehousing, data centres, retail, student housing and healthcare in the years to come.</p>



<p class="wp-block-paragraph">Also Read: <a href="https://squarefeatindia.com/with-57-value-share-cre-dominates-pe-deals-in-fy24/" target="_blank" rel="noreferrer noopener">With 57% Value Share, CRE Dominates PE Deals in FY24 </a></p>
<p>The post <a href="https://squarefeatindia.com/sebi-advocates-regularization-of-fractional-ownership-platforms/">SEBI advocates regularization of Fractional Ownership Platforms</a> appeared first on <a href="https://squarefeatindia.com">Square Feat India</a>.</p>
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		<title>Fractional ownership market in India predicted to grow over 10x to surpass USD 5 billion by 2030</title>
		<link>https://squarefeatindia.com/fractional-ownership-market-in-india-predicted-to-grow-over-10x-to-surpass-usd-5-billion-by-2030-2/</link>
		
		<dc:creator><![CDATA[SquareFeatIndia]]></dc:creator>
		<pubDate>Fri, 22 Mar 2024 12:26:00 +0000</pubDate>
				<category><![CDATA[Realty]]></category>
		<category><![CDATA[Fractional ownership]]></category>
		<category><![CDATA[ownership]]></category>
		<category><![CDATA[part ownership]]></category>
		<guid isPermaLink="false">https://squarefeatindia.com/?p=7197</guid>

					<description><![CDATA[<p>Micro, Small and Medium (MSM) Real Estate Investment Trusts (REIT) regulations by SEBI,&#8230;</p>
<p>The post <a href="https://squarefeatindia.com/fractional-ownership-market-in-india-predicted-to-grow-over-10x-to-surpass-usd-5-billion-by-2030-2/">Fractional ownership market in India predicted to grow over 10x to surpass USD 5 billion by 2030</a> appeared first on <a href="https://squarefeatindia.com">Square Feat India</a>.</p>
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<p class="wp-block-paragraph"><em>Micro, Small and Medium (MSM) Real Estate Investment Trusts</em> <em>(REIT) regulations by SEBI, a timely intervention to pave the way for a thriving fractional ownership market in India</em></p>



<p class="wp-block-paragraph">·       <em>Indian fractional ownership market currently at ~USD 500 million, office assets account for >90% of the market</em></p>



<p class="wp-block-paragraph">·       <em>Over 328 million sq. ft of office assets, valued at ~USD 48 billion are Micro, Small and Medium (MSM) REIT-worthy</em></p>



<p class="wp-block-paragraph"><strong> </strong>The Indian fractional ownership market is currently estimated at around USD 500 million and is expected to grow 10 times in the next 5 years. Albeit the regulatory compliance issues that the industry is expected to witness during the initial phase of implementation of the MSM REIT regulations, these are expected to pave the way for the market to grow and potentially surpass USD 5.0 billion of Asset Under Management (AUM) by 2030.</p>



<p class="wp-block-paragraph">A <strong>JLL – PropShare analysis, released today, </strong>highlights the immense growth potential of the real estate fractional ownership market in India. The analysis examined Grade A office assets across the top seven (Mumbai, Delhi NCR, Kolkata, Chennai, Bengaluru, Pune, and Hyderabad) markets of India shedding light on the potential size and expected growth trajectory of the market.</p>



<p class="wp-block-paragraph">Traditionally, real estate investment has required a substantial amount of capital. Given high capital requirements and lack of liquidity, investing, especially in commercial real estate was limited to institutional investors or individuals with significant financial resources. However, the emergence of REITs and Fractional Ownership Platforms (FOPs) have transformed the real estate investment landscape. These innovative platforms have democratised access to real estate for retail investors and provide opportunities for investors to diversify their investment portfolios by accessing asset classes that were previously exclusive.</p>



<p class="wp-block-paragraph">“The current fractional ownership market is estimated at ~USD 500 million based on value of assets under management. However, our analysis reveals significant prospects for growth. More than 328 million sq. ft of grade A office assets in the top seven cities of India, valued at ~USD 48 billion are MSM REIT-worthy. This illuminates the promise and potential of this sector’s burgeoning future. The REIT market in India grew from ~INR 0.3 trillion to ~INR 1.3 trillion in Gross Asset Value (GAV) within a span of five years. As the regulatory framework falls into place and FOPs overcome initial implementation obstacles, we expect the MSME REIT market to experience an even more accelerated pace of growth,” <strong>said Dr. Samantak Das, Chief Economist and Head of Research and REIS, India, JLL</strong>.</p>



<p class="wp-block-paragraph"><strong>Small and Medium REITs: Fostering Growth with Regulatory Oversight</strong></p>



<p class="wp-block-paragraph">To formalise the nascent fractional ownership space, the Securities and Exchange Board of India (SEBI) has the Small and Medium Real Estate Investment Trusts (SM REITs). Amendments to the REIT Regulations 2014 enable the formation of SM REITs, addressing concerns regarding regulatory oversight in FOPs.</p>



<p class="wp-block-paragraph">Prior to the SM REITs regulations, regulatory oversight of FOPs was mostly ambiguous or absent and with rising investor interest it raised concerns on lack of uniformity in disclosure standards, lack of transparency in valuation, management fees, maintenance costs, redressal of investor grievances. The notified regulations require registration of all FOPs with SEBI under the REIT regulations. With all schemes listed on stock exchanges, open market transactions will lead to more transparency, better investor protection and making exits easier for investors, truly democratizing the investment play in Indian real estate.</p>



<p class="wp-block-paragraph"><strong>Key aspects of the SM REITs regulations</strong></p>



<p class="wp-block-paragraph">The regulations address key aspects to safeguard investor interests, and to ensure organized growth of the market. First, it requires the investment manager responsible for setting up an SM REIT to have a net worth of at least INR 20 crore and at least two years’ experience in the real estate industry or real estate fund management. Also, in a scheme of the SM REIT scheme which has opted not to undertake leverage, the investment manager shall always hold at least 5 per cent of the total outstanding units during the first three years. The minimum holding increases to 15 per cent in the case of leveraged schemes. Second, SM REIT schemes are not allowed to invest in under-construction or non-revenue generating real estate assets. At least 95% of the value of the schemes’ assets must be invested in completed and revenue generating properties and the remaining 5% can be invested in ‘unencumbered’ liquid assets. Third, the size of the asset to be acquired in a SM REIT scheme should be at least INR 50 crore and less than INR 500 crore with units to be issued to a minimum of 200 investors.</p>



<p class="wp-block-paragraph">The SM REIT regulations lower entry barriers and have the potential to bring many income-generating small and medium real estate assets under the purview of REITs, providing a new funding avenue for them to raise capital. Additionally, it is expected to act as a catalyst in enhancing transparency and market efficiency, thereby boosting the participation of domestic as well as foreign retail investors and increasing liquidity in the Indian real estate market.</p>



<p class="wp-block-paragraph">“As the first and largest platform, PropShare was a pioneer in establishing the FOP market in India. When we started PropShare, our aim was to make institutional quality real estate accessible to a larger audience of sophisticated investors. With MSME REIT regulations, SEBI is now formally bringing this growing market into the regulatory ambit, which should lead to significant growth in this asset class while at the same time ensuring investors get the benefits that come with regulation – uniformity, fairness, transparency, and redressal mechanisms,” <strong>said Kunal Moktan, CEO, PropShare</strong></p>



<p class="wp-block-paragraph"><strong>A market with immense growth potential</strong></p>



<p class="wp-block-paragraph">Fueled by technological advancements and growing investor interest in alternative investment avenues, the FOP market in India is witnessing rapid growth. These platforms leverage online platforms and digital solutions to streamline the investment process, making it more accessible and user-friendly for a wider audience.</p>



<p class="wp-block-paragraph"><strong>Fractional Ownership Platforms Demystified</strong></p>



<p class="wp-block-paragraph">Fractional ownership, as the name suggests, empowers investors to own a fraction or share of a property, effectively lowering the entry barrier and enabling a diverse range of investors to participate. Fractional Ownership Platforms act as facilitators, streamlining the fractional ownership process. They provide a formal channel that enables retail investors to tap into primarily pre-leased commercial real estate including office spaces, warehouses, or even shopping malls (with office spaces currently dominating the market), at a fraction of the total cost. The cost of acquisition is split among several investors, who invest in securities issued by a Special Purpose Vehicle (SPV) established by the FOP. The investors earn returns in the form of rentals as well as long-term value appreciation of the property, with distributions made post deduction of management fees and other maintenance expenses. Over the past few years, web-based platforms offering fractional ownership of real estate assets have proliferated, attracting a growing number of investors.  However, a critical aspect remained unaddressed – regulatory oversight.</p>



<p class="wp-block-paragraph"><strong>Looking Ahead</strong></p>



<p class="wp-block-paragraph">Fractional ownership, with its inherent advantages of affordability, diversification, and potential for appreciation, is poised to become a mainstream investment option in India. As fractional ownership platforms continue to evolve in India, it is essential to focus on educating investors and stakeholders about this investment model. Efforts must also be made to enhance digital infrastructure and foster collaboration between FOPs, developers, and regulatory bodies.</p>



<p class="wp-block-paragraph">Moreover, addressing the regulatory aspects will ensure a well-defined and secure environment, allowing the sector to flourish and empower individuals, regardless of their investment capacity, to participate in the real estate market in an institutional manner.  In conjunction with REITs, SM REITs are set to accelerate the journey of India’s real estate sector towards becoming more organized and institutionalized. This, in turn, will fuel the growth and development of the real estate sector, creating a win-win situation for investors, asset owners, and the economy.</p>



<p class="wp-block-paragraph">Also Read: <a href="https://squarefeatindia.com/proptech-trends-that-will-dominate-the-future-of-real-estate/" target="_blank" rel="noreferrer noopener">PropTech Trends That Will Dominate the Future of Real Estate</a></p>
<p>The post <a href="https://squarefeatindia.com/fractional-ownership-market-in-india-predicted-to-grow-over-10x-to-surpass-usd-5-billion-by-2030-2/">Fractional ownership market in India predicted to grow over 10x to surpass USD 5 billion by 2030</a> appeared first on <a href="https://squarefeatindia.com">Square Feat India</a>.</p>
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		<title>Fractional ownership market in India predicted to grow over 10x to surpass USD 5 billion by 2030 </title>
		<link>https://squarefeatindia.com/fractional-ownership-market-in-india-predicted-to-grow-over-10x-to-surpass-usd-5-billion-by-2030/</link>
		
		<dc:creator><![CDATA[SquareFeatIndia]]></dc:creator>
		<pubDate>Wed, 20 Mar 2024 04:41:00 +0000</pubDate>
				<category><![CDATA[Realty]]></category>
		<category><![CDATA[Fractional ownership]]></category>
		<category><![CDATA[fractional real estate realty]]></category>
		<category><![CDATA[fractional real estate update]]></category>
		<category><![CDATA[fractional realty]]></category>
		<category><![CDATA[JLL]]></category>
		<category><![CDATA[real estate fractional]]></category>
		<category><![CDATA[realty fractional]]></category>
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					<description><![CDATA[<p>Micro, Small and Medium (MSM) Real Estate Investment Trusts (REIT) regulations by SEBI,&#8230;</p>
<p>The post <a href="https://squarefeatindia.com/fractional-ownership-market-in-india-predicted-to-grow-over-10x-to-surpass-usd-5-billion-by-2030/">Fractional ownership market in India predicted to grow over 10x to surpass USD 5 billion by 2030 </a> appeared first on <a href="https://squarefeatindia.com">Square Feat India</a>.</p>
]]></description>
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<p class="wp-block-paragraph"><em>Micro, Small and Medium (MSM) Real Estate Investment Trusts</em> <em>(REIT) regulations by SEBI, a timely intervention to pave the way for a thriving fractional ownership market in India<u></u><u></u></em></p>



<p class="wp-block-paragraph">·       <em>Indian fractional ownership market currently at ~USD 500 million, office assets account for >90% of the market<u></u><u></u></em></p>



<p class="wp-block-paragraph">·       <em>Over 328 million sq. ft of office assets, valued at ~USD 48 billion are Micro, Small and Medium (MSM) REIT-worthy</em></p>



<p class="wp-block-paragraph">The Indian fractional ownership market is currently estimated at around USD 500 million and is expected to grow 10 times in the next 5 years. Albeit the regulatory compliance issues that the industry is expected to witness during the initial phase of implementation of the MSM REIT regulations, these are expected to pave the way for the market to grow and potentially surpass USD 5.0 billion of Asset Under Management (AUM) by 2030.</p>



<p class="wp-block-paragraph">A <strong>JLL – PropShare analysis, released today, </strong>highlights the immense growth potential of the real estate fractional ownership market in India. The analysis examined Grade A office assets across the top seven (Mumbai, Delhi NCR, Kolkata, Chennai, Bengaluru, Pune, and Hyderabad) markets of India shedding light on the potential size and expected growth trajectory of the market.</p>



<p class="wp-block-paragraph">Traditionally, real estate investment has required a substantial amount of capital. Given high capital requirements and lack of liquidity, investing, especially in commercial real estate was limited to institutional investors or individuals with significant financial resources. However, the emergence of REITs and Fractional Ownership Platforms (FOPs) have transformed the real estate investment landscape. These innovative platforms have democratised access to real estate for retail investors and provide opportunities for investors to diversify their investment portfolios by accessing asset classes that were previously exclusive.</p>



<p class="wp-block-paragraph">“The current fractional ownership market is estimated at ~USD 500 million based on value of assets under management. However, our analysis reveals significant prospects for growth. More than 328 million sq. ft of grade A office assets in the top seven cities of India, valued at ~USD 48 billion are MSM REIT-worthy. This illuminates the promise and potential of this sector’s burgeoning future. The REIT market in India grew from ~INR 0.3 trillion to ~INR 1.3 trillion in Gross Asset Value (GAV) within a span of five years. As the regulatory framework falls into place and FOPs overcome initial implementation obstacles, we expect the MSME REIT market to experience an even more accelerated pace of growth,” <strong>said Dr. Samantak Das, Chief Economist and Head of Research and REIS, India, JLL</strong>.</p>



<p class="wp-block-paragraph"><strong>Small and Medium REITs: Fostering Growth with Regulatory Oversight<u></u><u></u></strong></p>



<p class="wp-block-paragraph">To formalise the nascent fractional ownership space, the Securities and Exchange Board of India (SEBI) has the Small and Medium Real Estate Investment Trusts (SM REITs). Amendments to the REIT Regulations 2014 enable the formation of SM REITs, addressing concerns regarding regulatory oversight in FOPs.</p>



<p class="wp-block-paragraph">Prior to the SM REITs regulations, regulatory oversight of FOPs was mostly ambiguous or absent and with rising investor interest it raised concerns on lack of uniformity in disclosure standards, lack of transparency in valuation, management fees, maintenance costs, redressal of investor grievances. The notified regulations require registration of all FOPs with SEBI under the REIT regulations. With all schemes listed on stock exchanges, open market transactions will lead to more transparency, better investor protection and making exits easier for investors, truly democratizing the investment play in Indian real estate.</p>



<p class="wp-block-paragraph"><strong>Key aspects of the SM REITs regulations<u></u><u></u></strong></p>



<p class="wp-block-paragraph">The regulations address key aspects to safeguard investor interests, and to ensure organized growth of the market. First, it requires the investment manager responsible for setting up an SM REIT to have a net worth of at least INR 20 crore and at least two years’ experience in the real estate industry or real estate fund management. Also, in a scheme of the SM REIT scheme which has opted not to undertake leverage, the investment manager shall always hold at least 5 per cent of the total outstanding units during the first three years. The minimum holding increases to 15 per cent in the case of leveraged schemes. Second, SM REIT schemes are not allowed to invest in under-construction or non-revenue generating real estate assets. At least 95% of the value of the schemes’ assets must be invested in completed and revenue generating properties and the remaining 5% can be invested in ‘unencumbered’ liquid assets. Third, the size of the asset to be acquired in a SM REIT scheme should be at least INR 50 crore and less than INR 500 crore with units to be issued to a minimum of 200 investors.</p>



<p class="wp-block-paragraph">The SM REIT regulations lower entry barriers and have the potential to bring many income-generating small and medium real estate assets under the purview of REITs, providing a new funding avenue for them to raise capital. Additionally, it is expected to act as a catalyst in enhancing transparency and market efficiency, thereby boosting the participation of domestic as well as foreign retail investors and increasing liquidity in the Indian real estate market.</p>



<p class="wp-block-paragraph">“As the first and largest platform, PropShare was a pioneer in establishing the FOP market in India. When we started PropShare, our aim was to make institutional quality real estate accessible to a larger audience of sophisticated investors. With MSME REIT regulations, SEBI is now formally bringing this growing market into the regulatory ambit, which should lead to significant growth in this asset class while at the same time ensuring investors get the benefits that come with regulation – uniformity, fairness, transparency, and redressal mechanisms,”<strong>said Kunal Moktan, CEO, PropShare<u></u><u></u></strong></p>



<p class="wp-block-paragraph"><strong>A market with immense growth potential<u></u><u></u></strong></p>



<p class="wp-block-paragraph">Fueled by technological advancements and growing investor interest in alternative investment avenues, the FOP market in India is witnessing rapid growth. These platforms leverage online platforms and digital solutions to streamline the investment process, making it more accessible and user-friendly for a wider audience.</p>



<p class="wp-block-paragraph"><strong>Fractional Ownership Platforms Demystified<u></u><u></u></strong></p>



<p class="wp-block-paragraph">Fractional ownership, as the name suggests, empowers investors to own a fraction or share of a property, effectively lowering the entry barrier and enabling a diverse range of investors to participate. Fractional Ownership Platforms act as facilitators, streamlining the fractional ownership process. They provide a formal channel that enables retail investors to tap into primarily pre-leased commercial real estate including office spaces, warehouses, or even shopping malls (with office spaces currently dominating the market), at a fraction of the total cost. The cost of acquisition is split among several investors, who invest in securities issued by a Special Purpose Vehicle (SPV) established by the FOP. The investors earn returns in the form of rentals as well as long-term value appreciation of the property, with distributions made post deduction of management fees and other maintenance expenses. Over the past few years, web-based platforms offering fractional ownership of real estate assets have proliferated, attracting a growing number of investors.  However, a critical aspect remained unaddressed – regulatory oversight.</p>



<p class="wp-block-paragraph"><strong>Looking Ahead<u></u><u></u></strong></p>



<p class="wp-block-paragraph">Fractional ownership, with its inherent advantages of affordability, diversification, and potential for appreciation, is poised to become a mainstream investment option in India. As fractional ownership platforms continue to evolve in India, it is essential to focus on educating investors and stakeholders about this investment model. Efforts must also be made to enhance digital infrastructure and foster collaboration between FOPs, developers, and regulatory bodies.</p>



<p class="wp-block-paragraph">Moreover, addressing the regulatory aspects will ensure a well-defined and secure environment, allowing the sector to flourish and empower individuals, regardless of their investment capacity, to participate in the real estate market in an institutional manner.  In conjunction with REITs, SM REITs are set to accelerate the journey of India’s real estate sector towards becoming more organized and institutionalized. This, in turn, will fuel the growth and development of the real estate sector, creating a win-win situation for investors, asset owners, and the economy.</p>



<p class="wp-block-paragraph">Also Read: <a href="https://squarefeatindia.com/proptech-trends-that-will-dominate-the-future-of-real-estate/" target="_blank" rel="noreferrer noopener">PropTech Trends That Will Dominate the Future of Real Estate</a></p>
<p>The post <a href="https://squarefeatindia.com/fractional-ownership-market-in-india-predicted-to-grow-over-10x-to-surpass-usd-5-billion-by-2030/">Fractional ownership market in India predicted to grow over 10x to surpass USD 5 billion by 2030 </a> appeared first on <a href="https://squarefeatindia.com">Square Feat India</a>.</p>
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