NSDL or National Securities Depository Limited is a financial institution that was established to keep securities like shares, bonds, etc in the shape of non-physical or physical certifications, that is in demat format. The securities are maintained in deposit accounts, which are similar to funds in bank accounts. It allows for quick securities transfer because ownership gets transferred merely by ledger entries. This is frequently done digitally, saving the extra time required in the previous practice of exchanging physical certificates once a deal was concluded. India’s capital market, which has been around for almost a century, has always been quite active. But, due to settlements that are based on paper, it had significant flaws such as poor delivery, prolonged transference execution, and so on. To address these concerns, the Depositories Act 1996 was enacted and went into effect on Sept 20, 1995. This legislation mandated the Security Depositories establishment in India to manage securities. Security is a financial asset that…
Investing 50L? Here Are Fractionally Owned Commercial Real Estate Opportunities in India
Fractional ownership is a recent trend in the real estate market which is a new, feasible, and pocket-friendly way for commercial real estate investors!
Indian have been investing their savings in gold and real estate opportunities for a very long time now. Most of the investing population of India has recognized the high potential of the real estate assets as a basic wealth and its surest as well as safest mode of investment. However, the investments in the real estate sector for urban households have been limited to small plots or apartments. This in turn has reduced the income of the investors as residential apartments do not generate rental income as much as commercial Grade A office buildings. The Grade A office properties have remained top on the list of preferred real estate assets despite the ‘work from the home trend. This segment has also funded a total investment of $15.4 billion in equity investments in the past decade.
With the introduction of the new, feasible, and safe pocket-friendly method of investment, namely fractional ownership investments, the demand for commercial real estate opportunities has increased further. Multiple real estate investors pool in their funds to invest in Grade A office properties jointly. These opportunities are surely safe due to them being carefully vetted legally and through rigorous clearance checks before they are offered to the investing public. It is an investment method that is more feasible in today’s Indian real estate market and it is expected to be dominating trend in the next 3.4 years. The potential of fractional investments can be seen by studying the US, Singapore, and Hong Kong markets.
Also Read: Commercial Real Estate Investment
Benefits of investing in commercial real estate through fractional ownership
While calculating the benefits of investments, you must understand that your returns are directly related to your proportion of investments. The capital appreciation received on the property is also shared among the different investors based on the proportion of their investment. The benefits of investing in commercial real estate are not limited to the ownership of a Grade A property but also:
- Earning a consistent, regular rental income that is often 2-3 times greater than rental revenue from residential units.
- Investment safety due to the underlying asset’s Grade-A quality.
- Improved liquidity since these units may be sold at any moment on the resale platform, providing liquidity.
- Capital gains have an unrivaled multiplier effect on overall returns when invested for a long period.
Unlike other investment opportunities such as equity and mutual fund, the price fluctuations in commercial real estate investments are less volatile. This is because the lease agreements typically for a longer length of time, with fixed rental revenue and periodic escalations to meet inflation. The opportunity to add a consistent income stream and a stable asset class will appeal to a forward-thinking Indian investor in the long run.
Also Read: Benefits of Commercial Real Estate Investing
How to invest in commercial real estate through fractional investments?
Here are some tips for investors to start investing in commercial real estate through fractional opportunities.
Getting the best price
Identifying the best price is a very crucial part for fractional investors. This is where experience comes into play. Information on high yield investment opportunities can be obtained with the help of the internet but identifying and getting the best price on your real estate investment opportunity can be a very crucial part as the precise valuation of a property and gauging its correct price is very important to ensure that the investors don’t overpay. If you invest through platforms such as Assetmonk, you are not only assured of a higher return on your investment, you can also get the best rates on your investments.
Big gain or higher returns on investments
All real estate investments should be treated as investments and you should invest to exit it sometime in the future. It is only after the investor cashes his property and recoups his capital gains, can an investment be said to be complete. If you invest through platforms such as Assetmonk, we will provide you opportunities keeping in mind long-term invasive perspectives and maximum capital gains, without limiting returns to just rental incomes. If invested properly in the best opportunity, investors can surely earn more wealth from capital gains on resale than rental incomes.
It’s not about single transactions
Unlike many start-ups, which are focused on racking up as many transactions as possible to maintain funding, established completely debt-free corporations may be more concerned with creating long-term connections with consumers. This includes aiding with the sale of property, assisting the customer with asset tracking, and eventually organizing the resale.
Long-standing channel partners
It goes without saying that the longer a real estate firm has been in business, the stronger its industry network becomes.
Ownership by Grade Commercial real estate, which includes office buildings, warehouses, and factories, requires a huge amount of capital, typically in the billions of rupees! As a result, it is only available to high-net-worth individuals, family offices, and institutes. For someone looking for a low-risk investment that is not susceptible to the volatility of stock markets or the low-interest rates on fixed deposits, fractional ownership in a high-quality commercial asset class is an ideal alternative. As a consequence, fractional ownership will empower Indian households with a whole new financial asset class, allowing them to own commercial property based on their budget. The concept of fractional ownership is undermining HNIs’ monopoly in commercial real estate deals. Assetmonk is one of India’s leading real estate investment platforms offering commercial real estate investment opportunities in Tier I cities such as Bangalore, Chennai, and Hyderabad. Assetmonk offers an annual IRR on investments at a rate of 15-21%.
Fractionally Owned Commercial Real Estate Opportunities in India FAQ'S:
In this model, all owners hold ownership of the property and reserve the right to use it without jeopardizing (harming) the rights of other co-owners. One co-owner may sell their interests in the property with the approval of the other co-owners.
Fractional ownership is a method by which several unrelated parties can share in, and mitigate the risk of, ownership of a high-value tangible asset, typically a jet, yacht, or piece of resort real estate. It can be done just for monetary motives, but there is usually some level of personal access involved.
While traditional timeshares provide access to the property for one to two weeks each year, fractional ownership can provide access to the house for five weeks or more per year, depending on the number of owners per unit.