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Mumbai, Delhi, Bengaluru: Leaders in Fractional Property Investments


Skyline of Mumbai, Delhi, and Bengaluru highlighting the rise of fractional property investments through SM REITs.
Fractional Property Investments: A New Frontier in Mumbai, Delhi, and Bengaluru

 

Introduction

 

Revolutionizing Real Estate: The Rise of Fractional Investments

 

India's real estate sector is undergoing a seismic transformation, propelled by the burgeoning adoption of fractional ownership. This innovative investment vehicle, facilitated by Fractional Ownership Platforms (FOPs), enables individuals to co-own portions of high-value real estate assets, such as commercial office spaces, thereby eliminating the necessity of purchasing the entire property.

 

SM REITs: A Catalyst for Fractional Ownership

 

The Securities and Exchange Board of India (SEBI) has introduced Small and Medium REITs (SM REITs), significantly supporting the fractional ownership market. These REITs specifically target smaller, well-leased assets, creating abundant opportunities for investors seeking diversification and potentially higher returns.

 

Mumbai, Delhi, Bengaluru: Leaders in Fractional Property

 

Mumbai, Delhi NCR, and Bengaluru: At the Forefront of SM REIT Investments

 

A recent JLL-Property Share report underscores Mumbai, Delhi NCR, and Bengaluru as the frontrunners in the SM REIT market. Together, these cities offer a robust supply of Grade A office spaces exceeding 328 million square feet, collectively valued at approximately USD 48 billion, all of which fall under the SM REIT investment umbrella.

 

Mumbai: A Premier Investment Destination

 

Mumbai distinctly emerges as a lucrative market for SM REITs. With over 55 per cent of its Grade A office space, equating to 84.4 million square feet, suitable for fractional ownership, the city presents an impressive investment potential nearing USD 18.7 billion. This allure is strengthened by Mumbai's well-managed portfolio of leased commercial assets, incorporating both large and mid-sized properties.

 

Mumbai's Skyline Transformation

 

The real estate landscape in Mumbai is poised for significant growth, with an anticipated 34 per cent rise in skyscrapers surpassing 40 floors over the next six years (2024-2030), as reported by Anarock Property Consultants Pvt Ltd. The land scarcity in the Mumbai Metropolitan Region (MMR) is a key driver behind this vertical construction trend.

 

Expansion of Investment Opportunities

 

Bengaluru: A Tech Hub Offering Promising Investments

 

The growth of fractional ownership extends well beyond the top three cities. Bengaluru, recognized as a major technology hub, offers substantial opportunities along its off-CBD corridors, hosting numerous small and mid-sized commercial office projects that are ideal for SM REIT investments.

 

Hyderabad: Emerging Opportunities

 

Similarly, Hyderabad's burgeoning Grade A office market, concentrated in the Hitec and Gachibowli corridors, presents a massive USD 3.7 billion opportunity for fractional ownership investors.

 

Expert Insights and Future Prospects

 

Industry Perspectives

 

Samantak Das, Chief Economist and Head of Research at JLL India, asserts that fractional ownership, facilitated by SM REITs, provides a compelling alternative for retail investors looking to penetrate the real estate market. He emphasizes the accessibility and reduced costs associated with fractional investments compared to traditional real estate investments.

 

Kunal Moktan, Co-Founder and CEO of Property Share, another leading FOP, highlights the transformative potential of fractional ownership. He perceives SM REITs as a pivotal step towards the full securitization of real estate assets in India, reflecting the trend initiated by REIT regulations in 2014.

 

Conclusion

 

India's fractional ownership market is witnessing spectacular growth, driven by the advent of SM REITs and the vast opportunities presented within the top commercial cities. With increasing investor interest and regulatory support, fractional ownership is set to become a mainstream investment avenue, democratizing access to high-value real estate assets across India.

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