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Fractional Ownership poised to grow: R&R

New Delhi, August 17, 2023: With SEBI’s recent announcement to regulate Fractional Ownership in residential real estate, owning a luxury home is just a ‘fraction’ of share away,” states the latest report by R&R, an independent research wing of Rise Infraventures Limited. The recent announcement of market regulator, SEBI, to regulate Fractional Ownership in residential realty, is being considered as revolutionary for the residential real estate sector in India, with a potential to benefit millions of investors who always aspired for luxury real estate but could not afford it for lack of funds.

An investment approach where multiple investors get together and create a pool of funds, when as individuals, they do not have the requisite funds to buy the aspiring asset, Fractional Ownership, ensures that the cost of an asset is split between multiple investors, and all the shareholders/investors get the benefits of the asset, such as income sharing, reduced rates, and usage rights. 

Vishesh Prakash, Head, R&R, explains the trend, “While Fractional Ownership has always existed in India, it was primarily restricted to REITs-driven warehousing and commercial real estate. But now, with SEBI’s recent regulatory framework announced for fractional ownership in residential real estate, a new ray of hope is showing up in the residential real estate. The future looks promising with the Fractional Ownership Residential Real Estate Market set to grow $5 Billion by 2024! Having said that, it’s important to note that the Fractional Ownership market in India is still evolving, and regulations specific to it may vary across states. As the market matures, there may be additional legal and regulatory guidelines and developments to ensure investor protection and transparency. What’s needed right now is a conscious effort to make an informed choice.”

Fractional Ownership is moderated by a real estate management company that invites inventors to invest a certain amount in a potential asset, and takes benefit from the asset appreciation, while at the same time, ensuring the regular upkeep, maintenance and records of the asset. The investors can go through a range of properties listed on IT-enabled platforms, and make an informed decision. A minimum ticket size is decided as shares, as per the property potential, and accordingly a set of investors/shareholders are invited to choose the portions as per their individual choice and capacity. The shareholders can withdraw their share at any point in time, as per need.

Fractional Ownership market in India is at a nascent stage as compared to the other parts of the world. Fractional Ownership allows individuals to invest in high-value properties at a fraction of the cost.