Reshaping NRI Investments In India By Fractional Ownership Of Commercial Real Estate April 2022 News


Is it possible to invest in Indian real property or commercial real estate as an non-resident Indian? How can non-resident Indians make investments in Indian real property? NRIs can invest in fractional ownership. This is India’s best investment option for NRIs. Fractional ownership is becoming more popular with NRIs. This is expected to be the future of the real estate industry because it addresses the biggest problem in commercial real estate, the high cost of entry and investment.

You are probably familiar with the phrase, “The privileged become rich while the poor get worse.” HNIs have the best investment opportunities, such as commercial real estate. This could be true in our country. Regular investors were not allowed to invest in high-risk stocks markets or poor return provident funds. Since the advent of fractional ownership, CRE markets have been opened to both NRIs as well as regular residents. A new Indian concept known as “fractional ownership” allows investors to come together and pool their resources to purchase commercial real estate assets. Assetmonk offers fractional ownership options to investors who want to invest. Assetmonk offers high-quality, A-grade investment options for crowdfunding and fractional ownership investors. They offer excellent liquidity and transparency and return rates of between 12 to 21%.

First, what is fractional ownership?

Joe has sole ownership of any property that is in his possession. Fractional ownership means that you own a portion of the building, rather than owning it all. Indian commercial real property is an excellent investment. However, ordinary Indian citizens are not able to invest because of certain obstacles.

How does fractional investment work? Hyderabad is home to an office building worth Rs 30 crores. It is not possible to invest in this property because of its high capital requirement. This property has many advantages. This property is also a safe investment option. However, an individual with Rs 9 lakhs can’t invest. It would be possible to invest in office space if everyone contributed some money. Everyone will be given a share of the property and they will split the earnings and bills according to their contributions. The office space will increase in value. Everyone who invests will see capital gains and rental income returns.

This is called fractional real estate ownership. This allows anyone with little capital to own commercial property and invest in it. There are pros and cons to fractional ownership just like everything else.

Is India a market for fractional ownership in CRE?

Financial Express reports that fractional ownership of commercial real estate in India is on the rise due to the fact that the Indian commercial property market is expected to grow 13%-16%. This could be due to increased demand for office space and the rise in large investors. These factors could lead to substantial capital appreciation.

Banks, MNCs and IT companies with large budgets rent commercial estate properties. These tenants are not likely to leave the property at short notice. This is a benefit for the owner. Commercial space lease agreements are for three years or longer. This is why fractional ownership and leasing property to established organizations are so attractive. They pay their rent on time. They prefer to renew their leases over moving.

What fractional ownership benefits are available for NRI investments in real estate?

  • Affordable: An office space is available for sale at Rs 100 crore. It is certainly a large investment that is out of reach of most people. It is not surprising that only HNIs would be interested in purchasing office space. You and I both can invest in the office space and become owners by contributing Rs 10 lakhs. This is fractional ownership. Fractional ownership of commercial real estate will bring you between 6% and 10% rent returns per year. You can therefore expect to earn Rs 60,000-1 la per annum.
  • Stable asset and a growing market: The nationwide lockdown of 2020 caused a slight slowdown in commercial real estate. However, it quickly recovered. After the pandemic, real estate suffered a severe hit in major cities around the world. However, industry experts say that India’s strong outsourcing sector has allowed office leasing to continue to grow. More than 63 percent in America’s office space is leased to international corporations. Investors should take this as a sign to invest in real estate. CRE markets are also growing.
  • Long-term tenants: Renters who live in residential buildings would never return. This can lead to a decrease in rental income until a new tenant takes over. However, office space renters do not usually vacate. The lease can be extended and would last for up to three years. Banks and MNCs often rent Grade A properties. They also pay their rent on time. Most tenants renew their leases because of the expense and time it took to convert a property into an office. To maximize your returns, it is always a good idea to invest in a leased property.
  • Returns: You must wait until the lock-in period expires before you can enjoy your gains if you invest in bonds. This is not true with fractional ownership. The rental income returns are transferred to your account each month. It also guarantees an increasing return rate on rental income appreciation and yield. In India, the 16% CAGR has been recorded for commercial property investments over the past five years. If you are a trusted real estate company such as Assetmonk, you can expect a 15% rental increase over the next three years. The tenancy agreement also includes a 15% rental increase. This agreement helps protect your future returns from inflation. It ensures the stability of your investments.