When a cluster of investors, be it institutional or individual, purchase a grade A real estate in fractions it is attributed as fractional ownership. By investing in such a property, they agree to share passive ownership of a high-worth real estate. The returns and incomes so generated are distributed to the fractional owners of the property. Fractional ownership reduces the financial burden on a single investor while allowing them to generate a steady stream of cash flows and long-term returns. Additionally, investors can diversify their portfolios by investing in multiple CREs at different locations.
For instance, there is a premium office space at a prime location worth Rs.120 crores. The CRE is already pre-leased by a large MNC, ensuring a steady cash flow and capital appreciation in the long term. However, an individual investor with only Rs18 lakhs to invest cannot afford to buy such property. But with the help of online platforms and advanced technology, the individual can buy partial ownership of the office with a pool of similar investors. As a result, individual investors can become a co-owner of Rs120 crore worth of CRE at just a fraction of the cost.