Real estate fractional ownership market to grow at 25–30% annually: Report

Fractional ownership of real estate is gradually gaining acceptance among investors as assets under management reach Rs 4,000 crore, as per a report.

TruBoard Partners, a tech-enabled real asset management company, published this report on fractional ownership. Various private companies have established platforms that enable investors to own a fraction of real estate properties.

Fractional ownership involves multiple investors owning a share of a real estate asset, reducing capital requirements and allowing more individuals to participate in real estate ownership. Investors invest in securities issued by a Special Purpose Vehicle (SPV) set up by these fractional ownership platforms, providing a formal means for a group of people to collectively own real estate.

Growth in fractional ownership  

While fractional ownership of real estate is still in its early stages in India, it is expected to grow in the coming years, driven by technology-based platforms, according to Sangram Baviskar, MD of Real Estate Practice at TruBoard Partners. The total assets under management (AUM) in India's fractional ownership market increased from Rs 1,500 crore in 2019 to Rs 4,000 crore in 2023, with TruBoard Partners projecting a 25–30 per cent annual growth rate in AUM over the next 4-5 years.

Shravan Gupta, founder and CEO of YOURS, a Bengaluru-based fractional ownership platform for holiday homes, noted the growing interest in fractional ownership, especially in luxury homes. He believes this investment tool offers opportunities for a wider audience to participate in this unique asset class. Gupta also anticipates that fractional ownership of real estate will likely fall under SEBI regulations but is optimistic about its future growth.

Several prominent players in the fractional ownership market include Strataprop, Hbits, Myre Capital Propshare, Yield Asset, Assetmonk Strataprop, and PropReturns. Securities and Exchange Board of India (SEBI) has proposed regulations to provide clarity and integrity to the fractional ownership platform landscape. These regulations recommend that such platforms register as Micro, Small, and Medium (MSM) REITs, with sponsors having a minimum net worth of Rs 20 crore. SEBI's draft guidelines also require units of MSM REITs to be listed on stock exchanges and specify criteria for asset size and composition.

(With PTI Inputs)