Real Estate: How fractional ownership is redefining the rules of investing for small investors?

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Real estate and equity have long been the primary avenues for investment. Recently, real estate is experiencing an upturn due to economic growth and rapid urbanisation. Traditionally, the realm of real estate investment for retail investors has been limited to residential properties or small commercial spaces, such as individual shops.

However, the landscape is shifting dramatically with the advent of fractional ownership. This allows access to institutional-grade properties that were once the exclusive domain of the very wealthy or institutional investors. The democratisation of commercial real estate (CRE) not only marks a significant evolution in the investment opportunities available to Indian investors but also offers rental returns that are approximately 3-4 times better than those of residential properties. Additionally, it provides higher capital appreciation, with targeted returns in the range of 11-18% IRR overall.

Also Read: Building your FY 2025 portfolio? Here are 5 real estate investment options

Historically, investing in A-grade commercial properties in India was a possibility only for the affluent or large-scale institutional investors due to the high capital requirements and complex management needs. This scenario is changing with fractional ownership platforms that have opened the gates to high-value, income-generating real estate. By pooling multiple investors together, these investment platforms allow individuals to invest in portions of commercial properties, making it less capital intensive and more accessible to a broader audience.

Additionally, these platforms offer the convenience of handling all compliance-related work and managing tenants, which can be a cumbersome process for individuals