The asset management services and data intelligence division of Square Yards, PropsAMC, has unveiled its unique platform for fractional real estate investments, with annual entry yields of 7-9% along with appreciation benefits. The aim is to generate a cumulative return up to 14-15% XIRR on the invested capital over a 3-6-year timeline. Square Yards is targeting the development of AUM (assets under management) of $1 billion within three years in real estate. The company feels that this platform will open new opportunities for young professionals and millennials for deploying investments in properties that generate income and secured assets at a fractional value. They can thus get more attractive returns in a short or medium period.
Co-Founder & CBO, Asset Management Services and Data Intelligence, Square Yards, Anand Moorthy, stated that as an asset class, real estate always had several innate attributes for fractional ownership. Project financing, rentals, and early buying may be held on the fractional system, provided that there is proper valuation, a secured title, and professional management. This may be a huge alternative for investors who usually prefer hedging against debt or pure equity options. Middle-class investors can now have ownership of several properties with negligible risks of development and this can become a future trading instrument as well.
Founder and CEO at Square Yards, Tanuj Shori, stated that the commercial realty market in the country has always seen the dominance of either institutions or HNWIs. Fractional investments will make commercial property investments more accessible for Indians. With this program, investors can build a diversified and income-yielding portfolio at a lower cost of acquisition. With yields of 7-9% per annum and appreciation of yields by 4-5%, along with 5-8% capital appreciation every three years, this will naturally generate 14-18% per annum in totality according to him.
The minimum participatory investment amount is Rs. 25 lakh, while the average size could be around Rs. 40 lakh. Shori also added that most products will come without lock-in periods for investors. Secondary transactions will be garnered in case there are investors looking for exits and this interest will be periodically published on the website. The usual realty cycle is 5-6 years and this provides ample scope for maximizing returns on these investments. The company will deploy investments in pre-leased and leased commercial properties including schools, holiday homes, warehouses, and more. Moorthy also stated that it will look at opportunities with higher coupon pay-outs for residential segments and in secured assets. The goal will be coupons or yields in addition to appreciation from the outset for investors. Cities like Mumbai, Gurugram, Chennai, Bangalore, Pune, Noida, Thane, Goa, and Chennai will be targeted according to him.
The net income from a property will accumulate in its escrow account, before distribution on the basis of the area and investment of the investor in question. This will be worked out post property tax, sinking fund, and AMC fee deductions. The eventual appreciation while exiting will also be collected in this account, before being distributed, post deducting the exit load according to Shori. A spokesperson for Square Yards stated that the market for fractional ownership in the country is cumulatively lower than Rs. 2,000 crore and is distributed amongst just 3-4 market players. It is expected to exceed $5 billion in the coming years while posting sizable growth. The company believes that with investments of Rs. 5-25 lakh, the opportunities for fractional ownership will naturally democratize the entire industry, while becoming a great option for investments for several people with moderate risk appetite.
For a detailed report on this read the articles we were featured in:
Financial Express – https://bit.ly/3GSG8eg
The Economic Times – http://bit.ly/3UbP6Gz
The Hindu – http://bit.ly/3i6TNUD
The Financial Express – http://bit.ly/3ODUW2p
ThePrint Hindi – http://bit.ly/3GR1tEL
Realty NXT – http://bit.ly/3VAmasG
Realty+ – https://bit.ly/3ijtlYb
Punjab Kesari – http://bit.ly/3EDe382
Free Press Journal – http://bit.ly/3GRQ5Zt
The Hans India – http://bit.ly/3gAsbal
Realtynmore – http://bit.ly/3Vbkg1X
Published Date: Nov 25, 2022
