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How is Fractional Ownership More Profitable for Upcoming Investors Today?

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How is Fractional Ownership More Profitable for Upcoming Investors Today?

Varun Mohan, Founder and CEO, Definite, 0

The majority of individuals from Gen X (born between 1965 to 1980) belonged to middle-class families who struggled hard to make a living. They started with meeting their family responsibilities, saving for their children’s education and ended up buying a residential property to make their children live a rent-free life. However, this mostly made them restricted to residential markets which helped them in owning a house.

The next generation, the millennials (born between 1980 to 1996), being well educated and who have lived in their own houses, begin to ponder upon investing in real estate the sooner they reach or cross their 30s. However, huge down payments as well as hefty amounts that go into EMIs take years of their, but allows them to own a property under the condition of expenses regarding property maintenance and other taxes. Practically, this makes it tough for millennials to invest in a commercial property they have been eyeing for years due to its highticket price.

What if they could own a fraction of their dream property that could be leased to a verified MNC tenant and generate good cash flow?

The mode of ownership in the Commercial Real Estate (CRE) segment has evolved dramatically over the years. Similar to timeshares, owning a fraction of a high-priced share has rebranded the conventional CRE sector and has emerged as a new way of investment for millennials.

Understanding Fractional Ownership in CRE
Fractional ownership that is gradually gaining popularity in India is poised to reduce the financial burden on a single investor or owner of the property. For example, the concept is like that of a group of like minded people owning a commercial property together become fractional owners. This approach of purchasing an asset simply divides the expensive cost into multiple fractions allowing millennials to participate in new opportunities at a fraction of the cost previously required.

For instance, a premium commercial building that is leased to a tenant can cost INR 50 crore for an owner or investor. A working professional with an investment amount of INR 25 Lakh can fulfill his /her dream to purchase that property through fractional ownership and earn similar benefits such as high yield in the range of eight to12 percent,
while the management of the asset is being taken care by an International repute agency and all the activities with the help of technology and AI are done at the click of a button.

PropTech in fractional ownership has shown tremendous results in securing investments tailored to investors’ needs. Additionally, the most reliable of them leverage the potential of technology in diversifying the investors’ portfolio across different asset classes and locations.



Traditionally, investing in the CRE sector was considered as a choice among wealthy and experienced investors. However, with the entry of new-age PropTech platforms, millennials can come together to not only purchase an asset, but enjoy the yield, sell their fraction whenever required and even enjoy capital gains at the time of exit.

PropTech – Enabler of Fractional Ownership
Millennials who attempt to sync into a visually-driven generation that has experienced the evolution of the world to become digitally driven, are tech-savvy and constantly thrive on ways to generate wealth. Amid the digital transformation of every business sector, technology has also transformed the way CRE is accessed by millennials.

However, new-age PropTech platforms have come forward to enable fractional ownership by providing easy access, transparency and asset management solutions to fractional owners. To be reliable in the industry, PropTech is backed by industry experts who are experienced in CRE and proprietary methodologies. Furthermore, it focuses on a diligent investment structuring process to protect the interests of fractional owners.

PropTech in fractional ownership has shown tremendous results in securing investments tailored to investors’ needs. Additionally, the most reliable of them leverage the potential of technology in diversifying the investors’ portfolio across different asset classes and locations. Apart from this, it eases the process of managing tax deductions for investors who eliminate time-consuming tedious tasks from the owners’ end.

Takeaway
With so many opportunities to invest in the market, millennials keenly plan to invest in tangible assets than intangible ones like stocks, fixed deposits, etc. Foreseeing the amount of yield generated by commercial property, millennials are looking to create passive income for themselves.

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