The WiseX’s Neo-Realty Survey 2024 unveils a significant shift in investment preferences among High Net Worth Individuals (HNIs), with 64% opting for fractional ownership in Commercial Real Estate (CRE). This innovative investment model allows multiple investors to collectively own a portion of a property, offering lucrative opportunities for long-term passive income and capital appreciation.
Insights from the Neo-Realty Survey
According to the survey, a staggering 72% of HNIs favor real estate investments, with 47% leveraging PropTech platforms for investment decisions. Additionally, 69% of HNIs are poised to increase their real estate investments, signaling a positive outlook on the sector’s future. Bengaluru emerges as the top choice for fractional ownership investments, followed by Pune, Mumbai, and Delhi NCR.
Regulatory Support and Investor Confidence
The survey highlights the impact of regulatory reforms, particularly the recent amendments in REIT regulations, including Small and Medium REITs (SM REITs). These changes have bolstered investor confidence, with 60% expressing increased trust in fractional ownership due to regulatory support from SEBI (Securities and Exchange Board of India).
The Rise of Fractional Ownership
Fractional ownership has witnessed exponential growth, evident from a 65% increase in market size since 2020, projected to reach USD 8.9 billion by 2025. This surge is attributed to its ability to democratize real estate investments and provide a reliable track record of timely payments through tech platforms.
Understanding Fractional Ownership in Commercial Real Estate
Fractional ownership allows investors to collectively own a portion of a high-value commercial property, such as office buildings or retail centers, without the need for sole ownership. This model, facilitated through legal entities like LLCs or REITs, distributes income, expenses, and taxes proportionately among investors. While it offers lower entry costs and diversified portfolios, challenges include decision-making coordination and potential conflicts over property management.
Conclusion
The Neo-Realty survey reflects a shifting investment landscape, with fractional ownership emerging as a preferred choice among investors seeking to diversify their portfolios and capitalize on the potential of commercial real estate. Regulatory reforms and technological advancements are positioning to further democratize real estate investments, opening access to a broader investor base.