IPA Newspack
  • Home
  • now
  • politics
  • business
  • markets

IPA /

IPA Special

IPA Special

Fractional Ownership, Blockchain Democratise Property Investment

By K Raveendran

Fractional ownership of real estate is catching up fast in India, particularly among the tech-savvy investors. As a concept, fractional ownership has democratized real estate investment in that it has given small investors access to commercial properties which otherwise remained the exclusive domain of high and ultra highnetworth individuals and institutions.

The fractional ownership market in India is estimated to have the potential to grow up to 16 percent in the coming years as specialist companies float new offerings. Last year saw tremendous growth with 70-80 per cent growth, which was of course on a small base. As the market matures and the trend catches on, the growth numbers are expected to fall into more sustainable levels.

According to real estate consultancy JLL, the fractional investment ownership system has provided investors with a new set of opportunities. Despite the Covid-19 pandemic, fractional investment deals worth Rs 350 crore were transacted in one year.

The agency estimated that the last five years, fractional ownership companies have done transactions worth around Rs 750 crores across the country. Investors are looking at Mumbai, Pune, Bengaluru, and Hyderabad markets favourably, JLL said in a report.

Tech-enable firm hBits has launched a commercial property worth Rs 42 crore. It said the Grade A+ asset boasts a high-entry yield of 10 per cent gross per annum and an expected internal rate of return (IRR) of 16.40 per cent. The company has acquired over 27,000 square feet in the Boomerang Building in Powai, which is the fastest-growing commercial real estate micro market in Mumbai, the company said.

The company says it already has a total asset under management (AUM) of Rs 150 crore in its kitty, registering over 50,000 customers on its platform. The new asset launch is an option for more investors who are looking at fractional ownership as an investment option. The building’s anchor tenant is a large US multinational corporation, which has contracted occupancy for a minimum of four years and the company says this means a steady and secure returns in the medium term.

Fractional ownership has been found to have high appeal for millennials who are looking for new methods to make money using technology. Fractional ownership not only opens up new channels for investors, but it also lowers the cost of investment. Young investors aged between 30-50 years in Tier I and Tier II cities are looking at opportunities to invest in Grade A assets from office space to warehouse and industrial parks as demand for these kinds of assets is on a steady increase in view of the expanding e-commerce industry and the focus on last-mile delivery.

According to hBits, commercial real estate provides 8-9 percent annual returns through rental yield and an opportunity to participate in the appreciation of the underlying property, giving it characteristics of both debt and equity. Most commercial leases escalate by 5 percent every year or 15 percent every 3 years providing a strong cushion against inflation. The real rate of return is therefore always8-9 percent with the capital appreciation providing the additional equity kicker.

Fractional property ownership has been greatly boosted by concepts such as tokenization and the use of technologies such as blockchain. Real estate tokenisation is the creation of tokens on the blockchain which are then assigned to properties that are either under construction or already exist. The tokens can represent different things, from a portion of the deed to equity interest in a legal entity or even ownership of collateralised debt. Since physical assets back these tokens, the value of the tokens fluctuates based on the performance of the asset. This is similar to traditional real estate investing, but with the additional advantage the holders can easily transfer their security with the help of blockchain technology.

Tokenisation has been a game changer in the field as real estate is considered one of the most illiquid asset classes that require significant capital commitments and long, expensive transaction processes. Through tokenisation, transactions are made simple and easier, allowing ownership to be transferred directly from investor to investor, essentially cutting out the middleman and saving money for both sides. (IPA Service)

IPA Special

Nepalese Prime Minister’s Four Day Visit Bring Ties With India Closer

June 3, 2023
IPA Special

What Will Be India’s Response To US’s Bid To Offer NATO+ Membership

June 3, 2023
IPA Special

Narendra Modi Has Been Most Successful In Using Technology For Governance

June 3, 2023
IPA Special

Law Commission Parrots Views Of BJP, RSS Rather Than An Expert View

June 3, 2023
IPA Special

Rahul Gandhi’s Alternative Vision Can Be A Good Basis For June 12 Discussion

June 3, 2023
IPA Special

Labour Market Recovery Still Under Hostage Of Multiple Crises

June 3, 2023
IPA Special

Erdogan’s Presidential Win Is A Clear Loss For People Of Turkiye

June 3, 2023
IPA Special

July 23 General Election In Spain Is The Test Of Left For Its Political Survival

June 3, 2023
Happening Now

One of Independent India’s worst rail accidents

June 3, 2023
Politics

Cong slams BJP for criticising Rahul’s remark on IUML

June 3, 2023
Politics

SGPC flays Rahul Gandhi statement about Guru Nanak

June 3, 2023
Politics

Kejriwal asks Cong to choose between Constitution and Modi

June 3, 2023
Politics

‘Free power’ parties will have to pay some way: Minister

June 3, 2023
IPA Special

Opposition Can Follow A Five-Point Approach To Defeat BJP In 2024 Lok Sabha Polls

June 2, 2023
IPA Special

Bigger Muslim Support To The Congress In Karnataka Poll Is A Positive Signal For 2024

June 2, 2023
IPA Special

Kejriwal Gathering Opposition’s Support Against Centre’s Ordinance

June 2, 2023
IPA Special

Modi Govt Is Planning To Make Sedition Law Stricter Before 2024 Polls

June 2, 2023
IPA Special

‘Deglobalisation’ Talk By Experts Means Tendency Of Western Powers To Discriminate Against China

June 2, 2023
IPA Special

Bengal BJP Revamps Its Campaign Strategy Focusing On Both Left And TMC

June 2, 2023
Happening Now

Law Commission backs sedition law with tougher punishment

June 2, 2023

An appeal

The legacy of IPA, founded by Nikhil Chakravartty, the doyen of journalism in India, to keep the flag of independent media flying high, is facing the threat of extinction due to the effect of the Covid pandemic. Only an emergency funding can avert such an eventuality. We appeal to all those who believe in the freedom of expression to contribute to this noble cause.
Click here to learn more

Share

Reply

  • 0
More on IPA

Nepalese Prime Minister’s Four Day Visit Bring Ties With India Closer

June 3, 2023 5:00 pm | IPA Staff

By Arun Kumar Shrivastav During his 4-day India visit, Nepalese Prime Minister Pushpa Kamal Dahal completed formal engagements with the Indian leadership and is visiting...

IPA Special

What Will Be India’s Response To US’s Bid To Offer NATO+ Membership

June 3, 2023 3:37 pm | IPA Staff

By Girish Linganna In what could be a significant turning point in global geopolitics, the United States is reportedly contemplating extending an invitation to India...

IPA Special

Narendra Modi Has Been Most Successful In Using Technology For Governance

June 3, 2023 3:35 pm | IPA Staff

By Harihar Swarup Prime Minister Narendra Modi has completed his Ninth Year as Prime Minister. Look at how he has already left his imprint on...

IPA Special

Law Commission Parrots Views Of BJP, RSS Rather Than An Expert View

June 3, 2023 3:34 pm | IPA Staff

By K Raveendran The Law Commission has taken a political stand in its report about sedition rather than a policy stand, which a body of...

IPA Special

Nepalese Prime Minister’s Four Day Visit Bring Ties With India Closer

in IPA Special
Jun 3, 2023   ·  

What Will Be India’s Response To US’s Bid To Offer NATO+ Membership

in IPA Special
Jun 3, 2023   ·  

Narendra Modi Has Been Most Successful In Using Technology For Governance

in IPA Special
Jun 3, 2023   ·  

Leave a Reply Cancel reply

You must be logged in to post a comment.

Follow us on
Up Next: B S Yediyurappa Is The Main Campaigner In Karnataka Poll After Narendra Modi
©2020 -2021 India Press Agency, All Rights Reserved.
Newspack by India Press Agency | Statement of Ownership | Contact Us
logo
  • Home
  • now
  • politics
  • business
  • markets