Chartered accountants and lawyers show the maximum relative interest in investments towards fractional ownership of Commercial Real Estate (CRE) reveals the ‘Myre Neo Realty Survey’ by Myre Capital, a neo-realty tech-enabled fractional ownership platform. Other segments of the investor and user base includes doctors, IT professionals, entrepreneurs, and other business owners. These investors prefer fixed income options that are collateralised with a hard asset and have started appreciating the favourable risk-return profile of fractional CRE and the end-to-end management provided by fractional ownership platforms.
Myre Capital conducted a nationwide Myre Neo-Realty Survey collecting responses from over 1,500 high-ticket registered users and investors. According to the survey, 68 percent of interested investors in CRE are within the age group of 36-60 years, 15 percent are between the age group of 25-35 years while remaining 17 percent investors belonged to the age group of above 60 years.
Senior citizens show interest in CRE
Though investors belonging to 60 years and above, have traditionally been averse to alternative investments, the trend is changing. CRE is enabling these investors to earn a collateral-backed steady monthly inflow with the probability of additional benefit of annual capital appreciation realized over time. This enables investors to realise additional gains at the time of exit due to capital appreciation.
The survey highlights some key needs and changes required by investors in the traditional form of investing in CRE like easier access to opportunities (33 percent), increased transparency (20 percent)), data symmetry (21 percent), and streamlining of processes (24 percent).
Myre Capital’s Founder and CEO, Aryaman Vir said, “Fractional investment has long existed in India but in an unorganised manner. The most common challenges like large ticket size, operational tasks, lengthy and complicated documentation, lack of expertise and trust is being solved by our platform to make this a more inclusive and accessible asset class. We believe that, with the regulations shaping out, investors will become more comfortable to place their trust in CREs and will be able to earn great returns from promising real estate opportunities in the country.”
The report also indicates that the investment preferences of investors vary with age. Young investors have a high risk-high return appetite and are ready to geographically diversify their property investments. Older investors prefer a low risk investment option with collateral-backed stable fixed income as many of them are retired and do not have a regular source of income.
Since fractional ownership opportunities are secured by an underlying hard asset, the risk profile fits well with the objectives of conservative investors. Such opportunities are also preferred by younger investors that are looking for double digit annualized returns – factoring in the annual capital appreciation, such investors can earn 17 percent-25 percent IRR without having to compromise on their risk exposure.
CRE has greater participation from women
As the demographics in India are transitioning to a more equitable gender distribution, CRE has seen increased participation from female investors. The survey reveals that from the total set of individuals that were surveyed, 41 percent were female users and investors. This gender distribution is relatively more equitable than most investment avenues.
In the shorter term, investors have highlighted rental income, reallocation of profits realized in equity markets, diversification of capital and effective monthly cash flow alternative as the driving factor with regards to their interest in fractional CRE. On the other hand, list of long-term goals for the same investors include, CRE portfolio creation, wealth creation, capital appreciation and capital preservation.
The survey shows that cities are gaining maximum traction among other key markets. Bangalore takes the lead with 27 percent of investors showing interest in fractional ownership, followed by 21 percent interested in Pune’s real estate. The survey also identifies that India is being seen as an emerging market for investments by the NRI community with almost a third of the respondents from countries like US, UAE, UK, Denmark, Nigeria, Australia, etc.
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