Exploring the Rise of Fractional Ownership: A Fresh Perspective on Real Estate Investments

Real estate investment has long been a highly sought-after avenue to build wealth, especially in India, where the industry has evolved and undergone unprecedented growth in the last decade or so. Often, real estate trends emerge directly from world events, and after the pandemic, most of us have felt the need for homes that feel more like home.

This has paved the path for a significant rise in shared ownership models in the real estate market, one of the key ones among them being fractional ownership.

What is fractional ownership?

Fractional ownership in real estate is the concept of jointly owning luxury real estate assets with multiple people, each having an equity stake in the property. This allows individuals to reap the benefits of luxury and high-end real estate without having to take up the entire burden of ownership.

Unlike a timeshare which usually only grants you access to a property for a limited amount of time, fractional ownership guarantees a stake and subsequent growth of your owned asset.

With this model, the barrier to entry is much lower than in traditional real estate investing, since you can share your investment costs with other parties who have also agreed to purchase a fraction of that particular property. This not only spreads out risk but also makes it easier for potential investors to get involved with high-end real estate investments in multiple locations that they may not have been able to access before.

Surging Popularity of Fractional Ownership in the Indian Real Estate Market

There has been an obvious evolution in ownership structure, fueled by democratizing fractional ownership by opening the gates for small investments. 

Although a relatively new concept, the fractional ownership sector in India is projected to reach a massive $5 billion (INR 40,000 crores)  mark in the next five years, with the real estate market expected to grow by approximately 13% to 16% in the same period.*

A lot of this anticipated growth can be attributed to several factors like a growing need for residential space, a surge in institutional investors and a significant influx of foreign investment in various real estate projects. 

This model has emerged as a lucrative investment opportunity in India due to the ease of access to homes in multiple locations, and professional management and maintenance, which individual investors owning luxury properties often cannot access with ease. 

This non-volatile form of investment provides flexibility to diversify one’s portfolio and scale profits upstream.

Fractional Ownership of Vacation Property

Owning a fraction of vacation property is more about usage than investment alone. It allows owners to purchase luxury vacation homes spread across exotic locales they otherwise would not have access to, while still sharing the costs with others and keeping the initial capital commitment low. 

With the sharing economy facilitating part-time residence in high-end getaways, these properties are no longer the exclusive realm of the elite.

This access also offers long-term stability and pleasure to the owners, at the same time providing greater access to a luxury market that remains normally untapped. It’s the perfect example of luxurious investment blended with equal parts practicality and pleasure.

Ownership of vacation property in India presents glittering opportunities to traverse the country’s vast and diverse landscapes in style. Right from the sun-soaked beaches of Goa to the majestic peaks of the Nilgiris, fractional ownership unlocks exclusive access to a host of India’s coveted retreats. 

The Future of Fractional Ownership in Indian Real Estate

Fractional ownership promises a sense of balance in what is increasingly becoming a seller’s market and could open a new wave of opportunities for developers, intermediaries, and investors, who have often had limited options and many threats to reckon with.

Many in the industry hope for a level playing field with long-term and safe investments in the real estate sector that is constantly enduring shifting currents in a burgeoning economy like India. 

Fractional ownership serves as a refreshing alternative for property developers, driving them to build high-quality real estate; for intermediaries, it helps them practice a much more orderly and transparent selling process; and perhaps more critically; it dons the mantle of the most dependable ally for investors for venturing into high-investment domains and garners lucrative returns  without diving headfirst into risks.

*Source: https://www.ibef.org/industry/real-estate-india#:~:text=By%202040%2C%20real%20estate%20market,the%20country’s%20GDP%20by%202025.