don’t short it, understand it
real estate like gold has been a traditional form of investment. and just like gold, it can generate income (when needed) and is something to flaunt. but unlike gold, the prospect of buying small amounts of real estate hasn’t been that sought-after.
people have owned property with their family for ages. sharing property isn’t an entirely new concept. but owning property with strangers is different, there are risks involved. it’s why platforms such as Strata, which has raised ~$1.5 million from Elevation Capital, have now started to gain popularity. these platforms become a place where people can meet others interested in fractional ownership.
this form of ownership eliminates the need for long and tiring site visits. it is also an opportunity for investors to diversify their portfolio and add an asset that may have been inaccessible otherwise. fractional ownership also becomes a relatively low-risk asset class.
anything from luxury office spaces to homes to even warehouses. luxury office spaces, for example, can offer a rental yield of 8-10%, but cost anywhere between INR 50 and 100 crore. however, one can invest, say, INR 25 lakh in this space and make a return of INR 2.5 lakh in a year.
if you are a retail investor, then you can even invest small amounts to the tune of INR 2-5 lakh in residential properties such as vacation homes and get a rental yield that can be between 1-3%.
in the past few years, fractional ownership of residential property has become popular. fractional ownership companies have done transactions worth around INR 750 crore across India in the past five years. last year, despite the pandemic, the market has seen deals worth INR 350 crore go through.
in more developed markets, fractional owners live in these spaces. it is shared with owners with respect to time or occupancy. think co-living.
investment in real estate has many benefits, but it is not something everyone can afford. fractional ownership provides a way to diversify one's portfolio and generate passive income over the long term. the concept is still in its infancy in India, but you can get on the ground floor of your dream home.