A survey has revealed that 64% of high networth individuals prefer the fractional ownership model to invest in commercial real estate (CRE) in India.
Bengaluru, Pune, Mumbai and Delhi NCR are the leading preferred markets for real estate and fractional ownership investments in India, according to the 2024 edition of the Neo-Realty survey by WiseX, India’s leading Neo-realty investments platform.
Of the 6,578 survey participants, 60% of overall investors and 64% of high networth individuals prefer the fractional ownership model to invest in CRE in India. As many as 2,174 HNI participants took part in the survey.
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Equities, mutual funds, real estate, and fractional ownership yielded highest returns
Equities, mutual funds, real estate, and fractional ownership yielded the highest returns for high-net-worth individuals in the past financial year, the survey said.
Fractional ownership has emerged as a new investment model in India over the last couple of years, and CRE is a growing asset class that allows investors to generate steady passive rental income for the long term along with capital appreciation.
Substantiating this, a recent report by Knight Frank stated that the market size of fractional ownership properties in India has grown by 65% from 2020 and is soon to reach USD 8.9 billion by 2025.
Bengaluru is the top preferred location for HNI investors
The survey suggests that Bengaluru is the top preferred location for HNI investors (31%) to make fractional ownership investments, followed by Pune (24%), Mumbai (22%) and Delhi NCR (13%).
WiseX’s survey also revealed that 61% of investors found equities to be the most rewarding in the last financial year, followed by innovative, new-age real estate investments like REITs and fractional ownership (45%), mutual funds (39%) and traditional real estate (35%). Moreover, 69% of HNIs are planning to increase their investments in real estate opportunities, demonstrating a bullish outlook on the sector.
The survey also indicates that real fractional ownership investments through tech platforms offer a great track record of timely payments which makes it a foremost reason for high investment in these models.
Of the investors who haven’t made a fractional ownership investment thus far, the biggest apprehension turned out to be liquidity concerns for about 30% investors. The survey revealed that the majority of investors favour real estate investments with a medium-term perspective of 1-3 years (20%) and 4-6 years (55%).
Speaking about the Neo-Realty survey, Aryaman Vir, CEO of WiseX, said, “Over the last decade, the investment landscape in India has undergone a transformation in demographics, technological progress, and there has been growth in individual disposable incomes. Investors are now increasingly open to exploring new investment options for better returns.”
“Our 2024 edition of the Neo-realty survey provides insights into the alternative investment space and industry trends, highlighting how affluent individuals across various income levels are shaping their financial strategies. The recent SEBI guidelines on SM REITs enhances layers of liquidity and safety to investing in real estate, and also makes it highly accessible to investors,” Vir said.
Real-estate investments a stable asset class
Despite an inclination towards equities and mutual funds, there is growing evidence of interest in investing in real-estate investments amongst investors as it is a stable asset class, he added.
“As a leader in the fractional ownership industry, it is heartening to see the sentiment towards fractional ownership growing positively over the past 3 to 4 years. While Bengaluru, Pune, Mumbai & Delhi NCR are the leading markets for real estate investments in India, we continue to witness high demand for real estate investments from other tier 1 & 2 cities as well,” Vir said.
“We believe the recent SEBI approval on regularizing fractional ownership framework, along with reducing the minimum threshold of investment to INR 10 lakhs will further help in democratizing real estate—a traditional asset class—to more investors,” he added.