Stock Market Too Rocky For You? Here’s Why Fractional Ownership Is the best Alternative Investment Now

Most of us started 2022 with high hopes for what the new year would bring. But we had no idea what it had in store for us. Russia-Ukraine war. Inflation. A major surprise indeed, right? As obvious as it is, 2022 has so far been unkind to investors, with most major stock markets, including the S&P 500, suffering significant losses and entering bear markets. At the heart of all this volatility is the uneasiness of investors. So, where else can we invest with ease then? Fractional ownership of the commercial real estate. 

When we mention investing in stocks to friends and family, one of the first questions they ask is, “Aren’t stocks risky?” “I don’t want to risk losing my money,” or anything along those lines.

Well, yes. The stock market may undoubtedly be a hazardous place to spend your money if you don’t grasp the dangers connected with investing in stocks and take necessary measures to reduce those risks. 

In 2022, the stock market is jittery. At the moment, the main worries are a mix of macroeconomic and geopolitical variables like the Russia-Ukraine war. They say war is a myth in the 21st century. But, Putin sure did bust that myth. The Russia-Ukraine conflict came as a surprise, to say the least because most market players believed that there would be diplomatic escalation but no full-fledged war until a few months ago. The battle couldn’t have arrived at a worse moment, since fears about the Covid-19 outbreak were just beginning to fade. Meanwhile, the conflict has driven up commodity prices, putting inflationary pressures on a variety of economies, including India.

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So, where else can you and I invest our hard-earned money then? Fractional ownership. 

Firstly, Fractional Ownership Is?

The cost of a commercial property is divided into many portions for ordinary investors to purchase an interest in it. Commercial property, such as office buildings and shopping malls, is prohibitively costly for private investors, costing hundreds of crores of rupees. Retail investors may now engage in a fast-growing sector, formerly inaccessible to them, breaking the property cost into smaller portions, say Rs 10-20 lakh apiece.

Because of the significant profits, it provides, fractional ownership is becoming a popular investment choice in India. The combination of rental income and capital appreciation makes it an ideal alternative for investors. And, as the swift recovery of the commercial real estate industry following the 2020 national lockout demonstrated, the sector is exceptionally resilient and capable of withstanding large shocks.

With an average rental yield of 8-12 percent, yearly capital gain of 5-10 percent, and consistent returns, fractional ownership is one of the most appealing assets on the market today.

With an average rental yield of 8-12 percent, yearly capital gain of 5-10 percent, and consistent returns, fractional ownership is one of the most appealing assets on the market today.

Do not miss Fractional Ownership In Indian Real Estate: What Is The Big Picture?

How Exactly Is Fractional Ownership The Better Investment Right Now?

• Stability: Because of portfolio diversification, ease of departure, capital gain, and constant rental income, small investors are now fractional owners of commercial properties. Furthermore, India’s commercial real estate market is expected to expand from 13-16% shortly, making fractional ownership of commercial buildings a beneficial investment. In addition, the commercial real estate market in India is expected to contract somewhat in 2020. Nonetheless, it greatly improved in Q3. Covid-19 has depressed worldwide property values, most notably in London, Dubai, and Stockholm. According to industry insiders, office leasing increased over the same period due to India’s thriving outsourcing economy. Over 63 percent of commercial space in India is used by multinational firms (mainly from the United States and Europe). It should signal to NRI investors that the time has come for them to receive a portion of the profits.

• Diversification: Do you wish to diversify your property assets but lack the funds to purchase homes in various markets? This is attainable through real estate fractional ownership. For example, shared ownership allows you to invest in a property while both working in commercial office buildings and renting out your home, and earning mortgage payments. Because your money is not connected to a specific property, you may distribute it among several properties, grades, locations, and regions within the same city. You can then opt to specialize in a certain sector or to continue diversifying and profiting from economic ups and downs. It reduces the likelihood of market volatility. You may get the benefits of diversification without having to make a hefty initial commitment.

• Access:  An investment in Mumbai’s INR 200 crore office building is possible through fractional ownership. It is a significant investment that is often only available to the rich. However, thanks to fractional ownership, anyone in Chennai may buy an identical property for as low as Rs 10 lakh. Annual rental returns on such office buildings might range from 6% to 10%. It earns between Rs 60,000 and Rs 1 lac in rental revenue every year. With Assetmonk, a person may invest in commercial real estate for Rs. 25 lacs.

• Long-term lease: Rental unit tenants change out regularly. As a result, the landowner must pay the rent until a substitute gets found. Commercial buildings have lease durations of three years or more. The lease contract can also be extended. As a result, commercial buildings provide investors with guaranteed revenue. Large enterprises, information technology organizations, and financial institutions rent high-end commercial facilities. These companies pay their rent on time. Furthermore, given the effort, time, and resources invested in transforming the premises into offices, several tenants have extended their lease terms. Invest in a previously rented commercial property, on the other hand, for huge returns.

• Rental Income Returns: Commercial estate fractional ownership provides a high return on investment due to ongoing rental revenue and appreciation. Over the previous five years, commercial property investment in India has expanded at a CAGR of 16%. Aside from the enhanced value, buying through a reputable fractional ownership firm may result in a 15% rise in rental revenue returns over the next three years. It is included in the lease contract to protect against inflationary pressures, ensuring that your investment remains constant over time.

• Property Appreciation: Investing in commercial real estate produces a two-fold return. The benefits of fractional ownership include immediate cash advantages as well as commercial property appreciation. You own a piece of commercial real estate. As a result, the worth of your share will skyrocket. Small investors are finding it more financially tempting.

• Liquidity: Liquidity is one of the most significant advantages of fractional ownership. Typical real estate investments have lesser liquidity than fractional property assets. Of course, you’d need to double-check your contract, but it’s unique to be able to sell your investment at any time, perhaps making trading less risky. How so? You may always sell and transfer your share of the property to others. Do not miss Real Estate Is Stable Yet Illiquid: How Fractional Ownership Fixes This For An Aspiring Investor.

Assetmonk is a well-known portal in India that provides real estate investment opportunities in Chennai, Hyderabad, and Bangalore. It provides feasible commercial space investment alternatives via fractional ownership with just Rs. 25 lacs and crowdfunding. The IRRs vary from 14 to 21%. Our products, however, are grouped into categories to meet different economic levels of investors. The three categories are Growth, Growth Plus, and Yield.