With Diwali around the corner, investors are ready to invest in their most favoured asset- Real Estate. But this time, there is a slight change in the investment process with a new term Frictional Ownership. We are here to know the difference in investment options and why the new way of investing has a lot of merits?
REAL ESTATE:
Real estate has bounced back to business even in the pandemic and should be considered a long-term wealth generation. A positive recovery can be seen in the commercial and residential estates because the HNI prefers them the most.
But investing in real estate is not hassle-free. Without a good knowledge of the market, not shortlisting the right opportunities can trick everyday investors. Moreover, some properties also have the burden of high capital deployment, loans, and ensuing EMI’s. Because of which many professionals prefer to stay in easily accessible investment classes.
FRACTIONAL OWNERSHIP:
A lucrative investment option, making the process paperless. The fractional ownership model has overcome all the cons of traditional investment and is becoming the future of real estate. It opens the gates of investing for attractive real estate, which was closed due to high entry barriers.
High quality commercial real estate generates around 12% of annual return with minimal volatility and provides security through tangible assets. But still, for many, it involves signified concentrated risk.
While using Frictional ownership, one can co-invest in these assets and others to as low as Rs. 10-20 lakhs.
Fractional ownership is a platform that provides you easy and affordable investment opportunities, pre-vetted and managed by teams of professionals. It solves all the hardships and makes it as simple as owning stocks.
The rise of the Frictional Ownership option can be seen both globally and in India. It has been expected that this fiscal there will be around 1000 crore invested through this platform. In India, it is expected to experience USD 5 billion markets by the year 2030.
New products always raise the question of security, and in this case of money. The added advantage of the Frictional Ownership is that your money is under the observation of institutional trustees along with the adoption of escrow. Expectations from your investment can be capital appreciation, monthly rentals, and attractive yields. It also solves the problem of liquidity as investors can sell their shares privately or through any platform.
But, no investment comes without risk. Like traditional investment, the Frictional Ownership should also be considered for long term appreciation as it usually takes 3-5 years to generate good returns.
It is also highly liquid as the secondary sale of the market is monitored by the supply-demand force.