India’s investment in fractional ownership of commercial realty up

V Nagarajan

India’s chartered accountants and lawyers show the maximum relative interest in investments towards fractional ownership of commercial real estate, (CRE) according to a realty survey by MYRE Capital, a neo-realty tech-enabled fractional ownership platform.

Other segments of the investor and user base include doctors, IT professionals, entrepreneurs, and other business owners.

These investors prefer fixed income options that are collateralised with a hard asset and have started appreciating the favourable risk-return profile of fractional CRE and the end-to-end management provided by fractional ownership platforms.

The survey was conducted among over 1500 high-ticket registered users and investors. According to the survey, 68 per cent of interested investors in commercial real estate (CRE) are within the age group of 36-60 years. 1568 per cent of the interested investors are between the age group of 25-35 years while remaining 1768 per cent interested investors belonged to the age group of above 60 years. Though investors belonging to 60 years and above have traditionally been averse to alternative investments, the trend is changing.

The survey reveals that from the total set of individuals that were surveyed, 4168 per cent were female users and investors. This gender distribution is relatively more equitable than most investment avenues.

Commercial real estate has always been the affair of either financial institutions or affluent families, primarily due to high entry price.

The survey highlights some key needs and changes required by investors in the traditional form of investing in CRE like easier access to opportunities (3368 per cent), increased transparency (2068 per cent), data symmetry (2168 per cent), and streamlining of processes (2468 per cent).

Fractional ownership platforms are addressing these issues to bring more trust and transparency in India’s CRE market.

The report also indicates that the investment preferences of investors vary with age. Young investors have a high risk-high return appetite and are ready to geographically diversify their property investments.

Older investors prefer a low risk investment option with collateral-backed stable fixed income as many of them are retired and do not have a regular source of income.

While investing in traditional CRE, the basic challenges that young investors face are high ticket prices, lack of expertise and exposure; older investors face issues pertaining to lack of trust, burden of day to day operational management, and fair value determination.

However, investing via fractional ownership gives these investors the chance to invest in institutional grade properties with twice the yield of FD returns, transparent Investor Dashboard facility which builds their trust and the capital is preserved with monthly returns. Further such platforms provide end-to-end management for the entire life-cycle of the investment.

The fractional space has gained significant traction in India, with MYRE Capital receiving NRI traction from over 14+ countries along with domestic users from 16+ cities in India.The survey shows that cities are gaining maximum traction among other key markets.  Bengaluru takes the lead with 27 per cent of investors showing interest in fractional ownership, followed by 21 per cent interested in Pune’s real estate. The survey also identifies that India is being seen as an emerging market for investments by the NRI community with almost a third of the respondents from countries like US, UAE, UK, Denmark, Nigeria, Australia, etc.

Fractional ownership platforms are making it viable for retail investors to participate in institutional grade rent-yielding properties from a minimum investment size of Rs25 lakh.

I have two sisters living in Pune, and all of us have inherited a flat in a cooperative society. My sisters are ready to relinquish their rights on payment of an agreed sum of money. What is the ideal way to resolve this situation? Please guide me. Dharmadev, Sharjah.

Assuming that the flat is owned by all the three siblings in equal proportion and the share certificate issued by the society is also in the name of the all the three siblings, your siblings may execute a release deed in your favour.

You will have to register the release deed before the concerned office of the sub-registrar of assurances on payment of stamp duty. Thereafter, you will need to submit a copy of the registered release deed to the cooperative housing society along with the original share certificate to transfer the share certificate in your name.

My relative expired while working in the Gulf. He had assets both in India and in the Gulf. How will the inheritance/succession laws apply in the absence of a Will? Shishir Dubai.

In the Gulf, the money kept in the bank account would be distributed as per the succession act of that country. In the case of immovable assets in India, Indian laws of inheritance/succession would apply.