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How Technology Is Transforming CRE Through Fractional Ownership As far as the real estate industry is concerned, technological advancements--like artificial intelligence and blockchain--have already played a crucial role in its transformation and are continuing to do so

By Shiv Parekh

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Regardless of the industry, it's widely known that every time there's a technological revolution, there is a massive, collective shift in consumer behaviour and buying preferences. Today, people seek convenience and easy access to information in almost everything they go for.

As far as the real estate industry is concerned, technological advancements--like artificial intelligence and blockchain--have already played a crucial role in its transformation and are continuing to do so. Artificial intelligence has transformed the process of analysing consumer behaviour, buying behaviour and identifying potential investors. Adding to this tech-led growth, blockchain has led to the birth of a new way to help buyers and sellers connect, and it has also reduced costs by limiting the role of an intermediate in the transaction process.

Fractional ownership is one more example of a significant technological development which enables multiple people to jointly own a grade-A commercial property previously dominated by ultra HNIs and institutional investors. Since the cost burden and risk exposure are reduced, it is evolving as a ground-breaking way of entering the CRE market for average, middle-class investors, especially new-age investors. So, investors who do not have enough to be big players in the CRE Indian market can now also get into this zone by opting for fractional ownership. This will help them learn how to invest smartly and help them achieve their new-age goals.

Proptech ensures seamless end-to-end transactions

Numerous proptech firms have developed integrated platforms where investors can explore multiple fractional ownership opportunities, invest and keep track of their investments without any inconvenience.

Through checks, digital signatures, and e-KYC, end-to-end online transactions have also become seamless, quick and transparent, thereby completely transforming the process of investing in fractional ownership.

FA ensures transparency and equality

A perfect blend of real estate, finance and technology has made it possible to bridge the information gap regarding the CRE Indian market for investors, which speaks volumes about how proptech platforms have increased transparency. In addition, a cyber security breach has become less probable due to the integration of improved technological tools. It is not only transparent but also safe and secure. It is also driving equality because it is making CRE a haven for average and new-age investors. So, if you want to start investing to achieve your new-age goals, investing in fractional ownership is an effective way to go about it. On these proptech platforms, people can get easy access to stabilised opportunities and a predictable, steady cash flow.

The interest of NRIs in fractional ownership is growing

Steady rental income, hassle-free investments, and long-term capital appreciation are why fractional ownership platforms are garnering a lot of attention from investors, including NRIs. NRIs are also into it because they can invest in it from anywhere. According to industry estimates, close to 30 per cent of NRIs are interested in fractional ownership of CRE in India.

The concept of fractional ownership was introduced in the US in the early 90s, and it gradually started gaining popularity in European countries, like Spain and Italy. Even though it is not as prominent in India as in countries like Hong Kong, the US, and Singapore, India is still witnessing its growing popularity as a viable investment instrument. The interest of Indian investors in fractional ownership is estimated to grow significantly in years to come. This is evident in the fact that according to Mordor Intelligence, the CRE market is expected to grow at a CAGR of 13.85 per cent by 2026, which is better than the average growth rate of 5.8 per cent in residential real estate.

Proptech platforms responsible for the advent of FA in India

Various proptech platforms have already started contributing to its growing popularity by allowing investors to come together on these platforms, invest in a CRE property, and enjoy attractive returns, liquidity, and capital gains. These platforms also manage pay-outs and distribute them to fractional investors effectively. Moreover, innovations such as video tours, machine learning, predictive analysis, and data science have also managed to grant people easy access to all the relevant information they might need about the properties they wish to invest in.

Most new-age investors are tech-savvy and prefer a seamless tech-driven experience, which explains why fractional ownership is likely to witness wider acceptance. Considering the crucial role technology has played till now in transforming the real estate industry, it will continue to be a driving force in making fractional ownership eminent in the future.

Shiv Parekh

Founder, hBits

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