New Delhi: PropsAMC, the asset management services and data intelligence arm of Square Yards, today launched its maiden fractional ownership real estate investment platform backed by proprietary data & analytical capabilities, offering an 7-9% annual entry yield plus property appreciation targeting a total of 14-15% XIRR on capital invested over a span of 3-6 years. This initiative will open newer avenues for millennials and young professionals to invest in high-grade regular “Income-Generating” properties and secured real estate securities at a fraction of the total price of the property and enjoy attractive returns in a short to medium period of time.
Anand Moorthy, Co-Founder & CBO, Asset Management Services and Data Intelligence, Square Yards said:
Real Estate as an asset class always had the inherent qualities to be owned in fraction. Rental, project financing and early buying can all be held on fraction, provided the underlying asset is fully title secured, rightly valued, and managed by professionals. This can be the biggest alternative investment for investors who like to hedge against pure equity or other debt investments. With fractional ownership, middle-class Indians can now own multiple investable properties with minimum or no development risks and make them a financial instrument to trade in the future.
Tanuj Shori, Founder and CEO, Square Yards said:
“India’s commercial real estate market has for long been dominated by high net-worth individuals and institutions. Fractional investing aims to break this status quo by making commercial property or “income-generating” investing affordable for the average Indian. With Square Yards’ fractional ownership real estate investment program, investors can build a diversified portfolio at a lower acquisition cost. With rental yields of 7-9% per annum, enhancement of yield by rent appreciation of 4-5 percent and finally the capital appreciation of 5-8% every three years, fractional investment is the reigning instrument of good faith at present to perform at 14-18% per annum,”
The concept of real estate fractional investing has attracted the attention of investors as they offer solid yields with predictable cash flows along with capital appreciation in a short period of time, despite market upheavals; something which equity, mutual fund markets cannot assure. It doesn’t carry the volatility of the REITs, which could be due to external reasons or global market sentiments.
Further, every fractional investment option is pre-vetted thoroughly, thus diluting the risk quantum and safeguarding investor monies, and helping the average salary-earning Indian to participate in investments that were once accessible only for HNIs, corporates and institutions.
The present market capitalization of 3 REITs in India is $10Bn with an average annual payout of approximately 6%. The domestic participation in REITs is less than 25%. Similarly, the active real estate-focused AIF funds in India are handful and is estimated only to be less than $0.5Bn. The fractional ownership market in India presently, is collectively less than 2000 Cr between 3-4 players and is pegged to grow multi-fold and surpass $5 billion in the next few years. We believe, with investments as low as Rs 5 to 25 lakh, fractional ownership opportunities will democratize the real estate investment market and become a lucrative investment avenue for a significant section of the moderately risk-savvy Indian populace.