Fractional Ownership- The future of Indian Real Estate
Real estate is one of the most booming industry in India. As per reports, Investment has been increasing by 32% on yearly basis. i.e. whooping 8 billion dollars each year. Especially with the new launches of projects in cities like Delhi, Mumbai, Bangalore, Pune, Surat and Gurgaon which are the top real estate contributing cities of India. But investors are not just interested to spend in cities but even in different states and in their rural and countryside areas for all the residential, agricultural and business ambitions. Despite a recession in the global real estate market, Indian Real Estate is thriving untouched with pride and speed. (To know more about Upcoming Recession read Blog 2)
Indian Real Estate Investment is almost 7% of the total Indian GDP (Gross Domestic Product). And it is projected to be almost 10% within 7-8 years. The contribution to the Indian economy will almost be 1 Trillion US Dollars in the coming years which is undoubtedly humongous. Even private investment inflows have reached over 3 billion US Dollars last year showing how much the private entities have faith in Indian Real Estate Invesment. Moreover, there have been 5 billion US Dollars in institutional investments happened in 2020 alone, which is equivalent to 90% of transactions recorded in the previous year.
Real Estate is one of the oldest business types in the world and also the most thoughtful one. From ancient times, when the Barter system was in place to the times of the Greeks and Romans to even now Land has been used as one of the most thoughtful products for business processes. Land ownership or Property Investment is indeed one of the most fundamental needs in human civilization. The game of acquiring and property sourcing has reached a level high that we are now talking in figures associated with GDP to justify how big a real estate business as a prospective investment is. Yet many missed the bus of such a growing skyscraper. Since the market is going saturated day by day, no doubt business movers of real estate are using it as a form of commodity to earn heavy investments out of it. There are many sub-categories through which you also can join the same bus which will surely lead you to get high returns on your investment one sub-category which is quite a buzz right now is Fractional Ownership Investment.
Fractional Ownership Investment is a type of real estate investment where you can invest in a fractions of a big residential or commercial plot, land or vocational second homes. There may be many reasons why investors invest fractionally one of them is to get easy returns yearly. About the market value of land, rates of land increase as per market curves. So, buyers get great returns on land. Also, if a land value is too big or there is any state law which doesn’t allow a single buyer to own land bigger than the allowance in-state municipalities then the buyer can invest in the land fractionally. This means the buyer gets an asset and he does not need to bother about the big land valuation.
Fractional ownership investment has reached over 800 crore Rs. in the last 5 years that too online and its existence here in India is more than 20 years. A limited liability partnership or a Trustee company creates an SPV (Specific Purpose Vehicle) to collect funds from buyers and purchase lands and redistribute the ownership to the buyer. Data of ownership gets registered in Government Records as well as in Public Records. The company must have a RERA certificate and a licence to deal as a mediator. Also, a Mediator is highly required to understand all the legalities, taxation, documents and returns prospects.
NRI’s, Property Investors, Entrepreneurs, and Angel Investors are investing a lot in fractional ownership not just in metro cities but also in states like Uttarakhand and Himachal Pradesh. They are buying land or property here as a second home where they think their hard-earned money must get multiplied while owning a land asset. Some are also owning fractional land and earning rental incomes on their land while some are buying land for future agricultural, Hospitality and other business ambitions. Owning holiday homes or resort in such regions has now a new form of investment through fractional ownership.
Every fraction of land is divided into bricks and each brick is then sold to individual buyers. SPVs also provide personalised property services in case you just want to invest and get returns while someone trustworthy manages your land or property. SPVs do every single task for you while charging a nominal fee as an annual maintenance charge. The best part of fractional ownership is that at the time of exit, liquidation becomes easy as you can sell the property fraction anytime, only thing you have to have is the unused 15 days in hand, while you are selling your fraction. Also, you can rent your property while gaining a 15-day stay as well and you can earn the rental income of that property too if you don’t opt to stay for those 15 days. It can be used as required with a prior booking on the software. If a few days have been utilised or none of the days have been utilised, then those days can be surrendered. In return you will receive the rental for the same number of days surrendered and there would be no maintenance cost incurred.
So, it happens a lot that if you have bought a big villa, flat or resort in such a destination then hardly you stay there for a month or more and it remains closed or unused for the remaining period of the year. In fractional ownership, you earn rental incomes of your fraction and dilution of your fraction becomes an easy decision. To facilitate a buyer in fractional ownership investment, PROPBNK helps with its website www.propbnk.com for the best guidance and selection of property. All the sale/purchase will be made through our website/software. The seller can sell his brick/share, on appreciated rates. There will be a bidding process on software to sell the brick to facilitate easy liquidation on appreciated prices. Through our website/software you not only gets the right property, but all the services including legal formalities along with Due Diligence and future guidance will be provided to you. PROPBNK does your work through the finest and most trustworthy minds in the business when the world is moving forward while investing in the land through different forms like this. It’s time you must not lag and gears up for great returns on your investments.