64% HNI investors prefer fractional ownership investment model in CRE: Neo-realty survey

April 24, 2024

The 2024 edition of the Neo-Realty survey by WiseX, a Neo-realty investments platform, stated that 60 per cent of overall investors (out of 6578 respondents) and 64 per cent of High Networth Individuals (2174 HNI respondents) prefer the fractional ownership model to invest in Commercial Real Estate (CRE) in India.

Fractional ownership in India has gained popularity recently. It’s a way for people to invest in commercial real estate (CRE) by owning a fraction of a property. With CRE, investors can earn regular rental income without actively managing the property and also benefit from its increasing value over time.

A recent report by Knight Frank stated that the market size of fractional ownership properties in India has grown by 65 per cent from 2020 and is soon to reach $8.9 billion by 2025.

Changes in REIT regulations, including SM REITs, contribute to the surge in fractional ownership. According to a WiseX survey of wealthy investors, 60 per cent of those new to fractional ownership cite SEBI’s regulatory backing as a key factor boosting their confidence in such investments. Despite commercial real estate investment being available before, increased regulatory supervision has reinforced their faith in it.

HNI preferences

The survey indicates Bengaluru as the top choice for HNI investors (around 31 per cent) for fractional ownership investments, followed by Pune (about 24 per cent), Mumbai (approximately 22 per cent) and Delhi NCR (around 13 per cent). WiseX’s survey also found that 61 per cent of investors favoured equities as the most rewarding investment in the last fiscal year, followed by modern real estate options like REITs and fractional ownership (45 per cent), mutual funds (39 per cent) and traditional real estate (35 per cent). 

Additionally, 69 per cent of HNIs plan to increase their investments in real estate opportunities, reflecting a positive outlook on the sector.

“Investors are now increasingly open to exploring new investment options for better returns. Our 2024 edition of the Neo-realty survey provides insights into the alternative investment space and industry trends, highlighting how affluent individuals across various income levels are shaping their financial strategies. The recent SEBI guidelines on SM REITs enhances layers of liquidity and safety to investing in real estate and also makes it highly accessible to investors,” said Aryaman Vir, CEO of WiseX.

The survey revealed that the majority of investors favour real estate investments with a medium-term perspective of 1-3 years (20 per cent) and 4-6 years (55 per cent).

(Inputs from BL intern Meghna Barik)

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