Indian fractional ownership is pegged at INR 4,000 crores, a modest share compared to a global market that is tentatively sized at around INR 39,000 crores. However, the segment holds tremendous potential to grow at an unprecedented pace, as per the latest report by 360 FRXNL.
360 FRXNL, which is backed by 360 Realtors is an online platform, that deals with fractional investment. The company has recently launched a white paper mentioning the future potential of fractional real estate in a host of segments including retail, holiday homes, grade-A offices, warehouses, etc. The white paper can be downloaded from the 360 FRXNL website.
“Indian real estate is set for quick adoption of fractional properties. What once looked like a fancy idea of investing in income-generating commercial assets, is now gaining prominence. In the fractional era, investing in commercial assets won’t be limited to selected elites. Even common investors with a disposable income of INR 10-20 lacs can now invest in sought-after commercial properties and earn higher returns.” Quoted Mr. Ankush Ahuja, CBO, 360 FRXNL.
As per the report, in Grade-A office real estate, currently, there is a visible potential of around 134 million square feet of space that can be transacted via the fractional route. This can rise to around ~ 180 million sq ft by 2027, growing at a CAGR of 7.7%.
Likewise, in the warehouse segment, the present potential of grade-A warehouse space that can be sold via fractional is pegged at 38 million sq ft. In the future, it can rise at a CAGR of 22.3% and amount to 85 million sq ft by 2027.
The report also highlights some key insights on the other asset types such as retail, holiday homes, etc.
Holiday homes are also a prudent investment choice with a multitude of benefits. Due to their rising popularity, many tourists as well as remote workers prefer to rent/ lease them thereby giving constant rental income to the tune of 5.5- 7.5%. This is much higher compared to residential yields in India, which is mostly pegged at 2.5- 3%.
Additionally, there are other benefits to investing in holiday home assets. It can be used for personal use as well. Likewise, it can be used for hosting parties and events with friends & and families. Holiday homes also come with attractive capital appreciation potential that can range from 8- 25% annually, depending on a host of factors.
Meanwhile, fractional can be a popular tool to invest in Indian retail real estate such as malls, high streets, shopping centers, and arcades, which otherwise are expensive.
“Owning a 2000 sq ft retail space in a place like Gurgaon can cost over 10 crores and is beyond the reach of many. Yet with the help of fractional properties, one can still make an investment, own a fraction of the asset, and earn yields to the tune of 8-9% annually. In this way, fractional can greatly lower the barrier to entering profit-generating commercial assets” Added Mr. Ahuja.
Also read: FRACTIONAL OWNERSHIP: A ‘Fraction’ of Ownership = A Growth ‘Multiplier’