Are real estate investors keen on fractional real estate? 3 experts share insights

livemint.com:

Real estate is one of the favourite asset classes of investors. However, with the increase in the cost of real estate and sky-high home prices, different investment options that aim to deliver returns of underlying real estate have come up. Fractional real estate is one such concept where people can invest in a fraction of a real estate property.

The investors are owners of that fraction of the real estate. It has been seen that realtors are pushing for fractional real estate in an aggressive manner, but people don’t seem that interested. Founder and CEO, Shiv Shiv Parekh of hBits, feels that lack of demand for fractional real estate can be attributed to three aspects.

“Firstly, fractional ownership of commercial real estate concept is relatively new, unlike traditional investment vehicles such as mutual funds that have been prevalent for decades. This unfamiliarity could contribute to hesitancy among potential investors. Secondly, there seems to be a lack of awareness about the product and a limited understanding of its advantages.

Investors may not be fully informed about how commercial fractional real estate can serve as a strategic financial instrument, providing exposure to real estate while offering diversified benefits. Additionally, the challenge lies in the fact that commercial fractional real estate is essentially a financial product backed by tangible assets (real estate). Realtors, who typically engage directly with physical properties, may find it challenging to grasp the nuances of a financial product designed to achieve diversification goals through real estate exposure," said Shiv.