The project is Square Yards’ first into the fractional product category and with an average investment participation of Rs 40 lakh from a pool of over 250 investors, the company has completed the acquisition.
“We plan to reach asset under management (AUM) of Rs 1000 crore within the next six months by building a gamut of assets across tier 1 cities, while focusing on properties that offer better periodic yields and exit returns,” said Tanuj Shori, Founder and CEO, Square Yards.
Amid the digital transformation of the commercial real estate sector, investing in commercial assets through fractional ownership is slowly becoming popular for people looking to build stable wealth. It has opened the commercial real estate market for middle-class investors who are looking for high-yielding assets alongside HNIs.
The Hyderabad commercial property will provide investors with 8% gross returns on their investment and a targeted Extended Internal Rate of Return (XIRR) of 14-15%, post fees and pre-tax.
“The fractional ownership market in India is at a very nascent stage and have 4-5 players collectively today, having approximately Rs 1200 crore asset under management (AUM). Presently most players are only investing in commercial yielding asset,” said Anand Moorthy, CBO, Asset Management Services and Data Intelligence, Square Yards.
“We see this market growing at 10x within 3 years with an average return of 14-15% XIRR (post fees, pre-tax) and would also start fractional offering in industrial assets, schools, student housing, hospitals, land etc. beyond just commercial assets,” said Moorthy.With the help of real estate tech platforms, it has become easier for investors to identify, buy, track and scale fractional property investments without any fuss. L
Experts said that investing in CRE via fractional ownership meets all criteria of returns, has the safety of capital preservation, and can generate steady monthly or quarterly cash flows.
The fractional ownership market in India is pegged to become a big investment vehicle in the coming years, with the market now valued at $5 billion and expanding. Demand for CRE and office leasing has grown significantly in the past couple of years in India as MNCs are dropping anchor in tier 1 cities to become a part of India’s growth story.
With the CRE market estimated to grow by 16%, fractional investing will play a stellar role in substantial infusion of capital in several upcoming commercial projects and in the same breath earn handsome returns for investors.
