PropsAMC, the asset management services and data intelligence arm of SquareYards, aims to offer an 7-9% annual entry yield plus property appreciation.
“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,” said Anand Moorthy, Co-Founder & CBO, Asset Management Services and Data Intelligence, Square Yards.
“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,” said Moorthy.
The platform will invest in mainly leased and pre-leased commercial assets including warehouses, holiday homes and schools in Mumbai, Thane, Pune, Bangalore, Gurugram, Noida, Chennai and Goa.
“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,” said Tanuj Shori, Founder and CEO, Square Yards.
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.
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 Rs 2000 crore between 3-4 players and is pegged to grow multi-fold and surpass $5 billion in the next few years.