Renivesh: Luxury & Commercial Real Estate Investments & Fractional Ownership in India

Looking for premium properties in India? Exploring luxury residential properties in India (Delhi, Noida, Gurgaon, etc)? Interested in commercial real estate properties across India?

Why Fractional Ownership Investments in Real Estate?

Fractional property ownership is the paradigm changing investment method in the real estate market. In fractional ownership, a high-value property is jointly invested by a group of people through a special purpose vehicle (SPV) company. It’s the millennial way of making high-value investment affordable and within reach.

Investing in real estate properties requires huge capitals. Traditional investment in real estate does not allow everyone to benefit from high-value properties. Only the ultra-HNIs and wealthy are able to invest in the most prime properties — residential, commercial and investment projects. Prime properties yield high returns and offer greater wealth appreciation. However, it’s beyond the reach of most because of the huge values of these commercial properties. Fractional property investments allow people with much lower investment capacity to enjoy the same benefits that ultra-wealthy and big real estate investors enjoy. It is also much safer than traditional real estate investing as your money can be diversified across different properties and reduce the risks associated with any property ownership.

Think of fractional ownership as turning a property into a company and then selling the shares. It allows investors to own as much as they can afford. With fractional property investments or property shares, people can invest in properties worth crores even if they can only invest a few lakh.

What is fractional ownership of real estate? How is it better than investing in traditional residential & commercial real estate (CRE)?

When a real estate asset (generally, commercial property) is acquired through funds pooled by multiple investors, each of the investors owns the property in proportion of their fund contribution. All investors get fractional ownership of the property and benefit from the share of rental income of the property. When the property is finally sold, the money generated from the sale is distributed and everyone gets to benefit from the capital appreciation of the property.

Fractional ownership of commercial real estate unlocks the door for small investors into the world of high-yielding Grade-A commercial properties which would have required a huge capital investment. With fractional property shares, retail investors can benefit from the prospects of high returns.

Fractional property ownership also provides relatively stable rental yield for investors as the tenants are top corporate houses and MNCs. When the economy is turbulent, small businesses are the first to feel the heat. When you own a small shop or office, your tenant might vacate the premises in a difficult economic situation. With deep-pocket companies, the rental lease agreements are for the long term (15 years or even longer) and they are less likely to shut shop.

How is property ownership title registered with fractional ownership?

When a property is purchased through pooling of funds, the money is first collected into a special entity created for the purpose of owning and managing the property. This special purpose vehicle (SPV) company then buys the property, and investors own the property through it. The property is not registered in any investor’s name. The property is registered in the name of the SPV. The investors have a shareholding in the SPV based on the proportion of their investment, and own equity shares and debentures in the SPV company.

What are the returns generated from fractional commercial real estate investments?

Rental income for Grade-A commercial offices and retail spaces generally range between 6-10% (annual). The rental returns are high for Grade-A commercial properties such as office spaces, retail spaces and commercial warehouses. Before selecting any property for investment, due diligence is conducted by the asset management company, both in terms of its legal standing and as an investment opportunity.

The return on Grade-A commercial property investments is in the form of:

• Stable rental income of 6% – 10% per year from the pre-leased property.
• Capital appreciation (increase in property price) of >5% per year.
• Net return on investment is around 12-20% at the time of property sale.

CRE investments yield a capital return of more than 5% annual if the investor stay invested a long tenure, say a minimum of 5 years. The targeted IRR is around 15-20% annualized, and a sale is executed only when the investment objectives are met.

Is my return on investment assured? How safe is it to invest in fractional real estate ownership?

Every investment comes with risks. Investments generally considered safe such as Fixed Deposits come with risks too. Even your money kept in a bank is subject to risks. Like any asset class, the returns from investing in CRE through fractional ownership are also subject to the risks associated with the asset class.

Some risks associated with CRE are tenancy, liquidity, and market risk. The asset managers select propertieswith least risks and conduct due diligence to minimize the risks associated with the investment. The rental income is subject to occupancy and this risk is limited by investing in pre-leased properties with Grade-A tenants with long-term lease and lock-in tenures.

As long as the property generates rental income, you will be charged a management fee (~1% of the investment value) every year by the asset management company that undertakes the asset maintenance, manages tenancy, and other asset management activities. Generally, management fee is charge only for the duration you receive the rent.

The asset management company may also charge a performance fee when the capital appreciation exceeds certain minimum threshold. You pay a fraction of the returns only when the asset brings high yields.

Does fractional property investment force lock investors without an exit?

Fractional property ownership can be sold and exited like other properties.

Generally, there is a small lock-in period of ~6 months, depending upon the property. Investors can sell their property share to any other investor at any point in time. It’s a sale of ownership along with the income benefits. When you find a buyer, the asset management company will assist you with transfer of your equity and rights to the buyer.

Once a property achieves its destined investment objective, a sale of the property is executed after collective decision from the investors.

Fractional property investment exits take place in the following manners:

• Collective exit when 75% (or pre-decided vote) of the investors decide to exit the property and ask the asset management company to find a prospective buyer for the property sale. Generally, the asset management company recommends selling the property in 4-5 years.
• Individual investors can exit by selling their fraction to any investor and the asset management company facilitate the share transfer.
• Individuals can approach the asset management company to facilitate the sale of their holding.

Can NRIs invest in fractional properties in India? What are the tax implications?

Non-resident Indian (NRIs) can invest in commercial real estate through fractional ownership like any other residential and commercial property. NRIs need to invest through an NRO account or a domestic savings bank account in India. Taxes on the income generated from their property holding will be taxed according to the existing income tax slabs beyond the exempted income limits updated by the government of India. Apart from this, NRI investors enjoy the same benefits as other invetors.

Bespoke Real Estate Advisory & Fractional Ownership Platform in India

Get bespoke property investment and property management service in Delhi, Noida & Gurgaon. Our services are also available across India for luxury housing and high-value commercial property investments.

Our services are focused at helping top executives, HNIs and wealthy individuals to discover and invest in most valuable properties in India. With access to most prime properties across India, we can help you purchase Grade A office buildings, large office spaces, commercial retail spaces, and luxury homes across the country.

Investments in five-star hotels, running businesses and promising startups are also available for the discerning investors. We also cater to the lending and corporate debt investments.

Premium Residential & Commercial Real Estate Investments

Renivesh helps you will high-value premium property investments in all major cities of India, such as Delhi, Noida, Gurgaon / Gurugram, Mumbai, Bangalore, Pune, Kolkata and Chennai.

For any big ticket commercial property purchase, no need to look for a commercial real estate agent in India. Renivesh helps you discover best commercial properties (Grade A offices, retails spaces, warehouse and more).

Fractional Investing / Co-Investing for Property Share

Investing in prime commercial real estate redefined with fractional ownership or co-investing. Unlock the opportunities of investing in some of the most expensive and sought-after Indian commercial real estate. Small investments can help you own properties worth several crores.

As a smart investor, you can invest in some of the most high-value commercial properties across Delhi-NCR and other metro cities of India. With ownership of a part in multi-crore commercial properties such as Grade A offices and real estate development projects, you reap full benefits at a fraction of the investment.

If you are looking for fractional ownership investment properties in Delhi, Noida, Gurgaon (Gurugram), Bangalore, Chennai, Hyderabad and other major locations across India, Renivesh is a great real estate fractional ownership platform that helps you get high rental yield and capital returns. Our fractional property investment platform helps you find fractional properties for sale in Delhi, Noida, Gurugram, Bangalore, Hyderabad and other major cities of India.