64% of HNI investors prefer fractional ownership model to invest in commercial real estate - Hindustan Times
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64% of HNI investors prefer fractional ownership model to invest in commercial real estate

Apr 24, 2024 12:23 PM IST

Bengaluru is the top preferred location for HNI investors (~31%) for fractional ownership investments, followed by Pune (~24%); Mumbai (~22%) and NCR (~13%)

As many as 60% investors and 64% of high net worth individuals prefer the fractional ownership model to invest in commercial real estate (CRE) and have expressed increased confidence in the framework following regulatory support from SEBI, a survey by WiseX, a neo-realty investment platform shows.

As many as 60% investors and 64% of high net worth individuals prefer the fractional ownership model to invest in commercial real estate (Picture for representational purposes only) (Pixabay)
As many as 60% investors and 64% of high net worth individuals prefer the fractional ownership model to invest in commercial real estate (Picture for representational purposes only) (Pixabay)

Recent SEBI guidelines on SM REITs add to the confidence

The WiseX survey of affluent investors shows that 60% of investors (out of 6578 respondents) who haven’t previously invested in fractional ownership believe regulatory support from SEBI has bolstered their confidence in fractional ownership investments. Although investing in commercial real estate has always been accessible, enhanced regulatory oversight has further solidified their trust, the survey shows.

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Also Read: SEBI notifies SM REITs: Move to regulate fractional ownership industry and safeguard investors’ interests

As many as 64% of high net worth individuals (2174 HNI respondents) prefer the fractional ownership model to invest in commercial real estate2, the survey showed.

Bengaluru, Pune, Mumbai and Delhi NCR preferred markets for fractional ownership investments

The survey suggests that Bengaluru is the top preferred location for HNI investors (~31%) to make fractional ownership investments, followed by Pune (~24%); Mumbai (~22%) and Delhi NCR (~13%), it showed.

WiseX’s survey also revealed that 61% of investors found equities to be the most rewarding in the last financial year, followed by innovative, new-age real estate investments like REITs and fractional ownership (45%), mutual funds (39%) and traditional real estate (35%). Moreover, 69% of HNIs are planning to increase their investments in real estate opportunities, demonstrating a bullish outlook on the sector, it showed.

Also Read: Sebi notifies small and medium Real Estate Investment Trusts

Also Read: First small and medium REIT expected to be listed by October: Naredco

Liquidity is the biggest concern

The survey also indicates that real fractional ownership investments through tech platforms offer a great track record of timely payments which makes it a foremost reason for high investment in these models. Of the investors who haven’t made a fractional ownership investment thus far, the biggest apprehension turned out to be liquidity concerns for about 30% investors.

The survey revealed that the majority of investors favor real estate investments with a medium-term perspective of 1-3 years (20%) and 4-6 years (55%).

Also Read: Fractional ownership market in India predicted to grow over 10x to surpass $5 billion by 2030: JLL-PropShare analysis

“Our 2024 edition of the Neo-realty survey provides insights into the alternative investment space and industry trends, highlighting how affluent individuals across various income levels are shaping their financial strategies. The recent SEBI guidelines on SM REITs enhances layers of liquidity and safety to investing in real estate, and also makes it highly accessible to investors,” said Aryaman Vir, CEO of WiseX.

“Despite an inclination towards equities and mutual funds, there is growing evidence of interest in investing in real-estate investments amongst investors as it is a stable asset class. While Bengaluru, Pune, Mumbai and Delhi NCR are the leading markets for real estate investments in India, we continue to witness high demand for real estate investments from other tier 1 and 2 cities as well," he said.

"We believe the recent SEBI approval on regularizing fractional ownership framework, along with reducing the minimum threshold of investment to 10 lakh will further help in democratizing real estate—a traditional asset class—to more investors,” he added.

Also Read: Have a crore to invest in a second home in Goa? Here’s what you should know

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