Fractional ownership of real estate assets in India is gaining acceptance among investors, as indicated by assets under management reaching Rs 4,000 crore, according to a report by TruBoard Partners. Many private companies have established fractional ownership platforms that allow investors to own a fraction of real estate assets. This concept involves multiple investors owning a share of an underlying real estate asset, reducing capital requirements and enabling a larger group of participants in real estate ownership. Investors contribute funds to securities issued by a Special Purpose Vehicle (SPV) established by the fractional ownership platform. These platforms provide a formal channel for pooling money and joint ownership of real estate.
Although fractional ownership is at a nascent stage in India, it is expected to grow in the coming years with the help of technology-driven platforms, according to Sangram Baviskar, MD of Real Estate Practice at TruBoard Partners. The fractional ownership market in India increased from Rs 1,500 crore in 2019 to Rs 4,000 crore in 2023. TruBoard Partners projects a 25-30% compounded annual growth rate (CAGR) in the market’s assets under management over the next 4-5 years.
Shravan Gupta, Founder and CEO of YOURS, a Bengaluru-based fractional ownership platform for holiday homes, stated that fractional ownership of real estate, especially luxury homes, is gaining greater interest in India and growing rapidly. This investment instrument attracts both investors and lifestyle seekers, providing an opportunity for more people to participate in this unique asset class. Gupta believes that fractional ownership of real estate will come under SEBI regulations and expects it to gain further traction in the coming years.
Other prominent players in the fractional ownership market include Strataprop, Hbits, Myre Capital Propshare, Yield Asset, Assetmonk Strataprop, and PropReturns. The report also highlights SEBI’s proposed regulations for the fractional ownership market, which aim to bring clarity and integrity to the landscape. According to these proposals, platforms should register as Micro Small and Medium (MSM) REITs, and sponsors must have a minimum net worth of Rs 20 crore to ensure active involvement. The draft guidelines also mandate that units of MSM REITs be listed on stock exchanges. The report emphasizes Sebi’s proposal that the asset size for acquisitions should range between Rs 25 crore and Rs 499 crore, with at least 95% of the assets under management being completed, revenue-generating real estate.
