Is Fractional Ownership the Future of Real Estate in India?

Fractional ownership disrupted the real estate game in Dubai, allowing people to co-own luxury properties without it costing a fortune. The model attracted billions in global capital and transformed Dubai into a hotspot for premium real estate investments. Now, the same model is gaining serious momentum in India.

With property prices soaring and individual ownership getting tougher, fractional ownership is opening doors for first-time and seasoned investors alike.
Backed by a growing number of fintech platforms, this space is scaling fast, pushing towards a billion-dollar opportunity. Is fractional the future of real estate investments in India? Let’s break it down

Explore: Top 5 Fractional Ownership Platforms in India

What is Fractional Real Estate?

Fractional ownership is a real estate investment model where multiple buyers co-own a high-value property by purchasing "fractions" or shares. Instead of spending crores on an entire property, individuals can become a co-owner of an asset with a small ticket size as much as ₹10 lakh and grow their wealth with potential capital appreciation.

Here's how it works:

1. A property is listed on a fractional ownership platform (like Per Annum's Estates, hBits, or PropertyShare).
2. Buyers pool their money to collectively buy the asset and shareholding is legally allocated as per the capital invested.
3. Owners benefit through potential capital appreciation and, in some cases, rental income. Shares can be sold on the secondary market or exited after a fixed holding period.

Platforms like Estates by Per Annum simplify the entire process by setting up a dedicated entity or SPV (Special Purpose Vehicle) that manages everything, from property maintenance to ownership structure and strategic exit when the target price is met.

Fractional ownership can apply to all types of real estate, commercial, industrial, or residential. On Per Annum, Estates focuses on premium residential properties from Grade A projects in prime locations like Gurgaon, Noida, Mumbai, and Bangalore.

The Fractional real estate model and features vary across platforms. It's important to conduct thorough due diligence before investing.

Explore: What is Fractional Real Estate? Should You Invest in it?

Why Is Fractional Ownership Becoming Increasingly Popular?

• Affordable Entry Point: Instead of buying a high-value property for ₹10 crores, you can start with as little as ₹10 lakh, making real estate investment more feasible.
• Effective Wealth Generation : Investors have the potential to earn from rental income and value appreciation without having to directly deal with tenant management or maintenance hassles.
• Diversification & Risk Reduction: Lower ticket sizes enable investors to diversify across multiple properties, reducing exposure to any single asset and helping manage risk more effectively.
• Technology-Driven Transparency: Advanced platforms leverage AI and blockchain to ensure secure transactions, real-time tracking, and complete transparency which lacks in traditional real estate.

As real estate investment evolves, fractional ownership is emerging as an innovative, low-risk model for building wealth—tailored for the new-gen, tech-savvy investor.

Market Growth & Key Data

Fractional ownership is a fast-growing investment trend in India. Here’s a snapshot of the current market:

Who Should Consider Fractional Ownership?

Fractional ownership is not just for seasoned investors, it’s a great option for individuals looking to enter the real estate market without the burden of full ownership. Here’s who can benefit the most from this model:

✔ First-Time Real Estate Investors

For someone new to real estate, buying an entire property can be overwhelming due to high capital requirements, legal complexities, and property management hassles. Fractional ownership allows first-time investors to own a share of a premium property with a much smaller investment. This offers exposure to real estate without the risks and responsibilities of direct ownership.

✔ Retail Investors Seeking Passive Income

Many retail investors look for steady, passive income sources. Investing in Grade-A commercial properties through fractional ownership can generate regular rental income (typically 8-12% annual returns). Unlike stocks or mutual funds, real estate provides a tangible, stable asset with potential appreciation over time. Plus, since the property is professionally managed, investors don’t have to worry about tenant issues or maintenance.

✔ Tech-Savvy Individuals

With the rise of digital platforms like Per Annum, PropertyShare, and hBits, investing in fractional ownership has become as easy as buying stocks online. Tech-savvy investors who are comfortable with digital transactions can benefit from the transparency and ease of access these platforms provide. Fractional ownership fits well with the modern, online investment approach that many young professionals prefer today.

✔ NRIs & High Net-Worth Individuals (HNIs) Looking to Diversify

For NRIs and HNIs, fractional ownership offers a strategic way to invest in India’s booming real estate market without the complications of full property ownership. Many NRIs hesitate to buy real estate due to regulatory concerns, maintenance issues, and lack of local presence. With fractional ownership, they can own a share in high-value commercial properties and earn rental income without worrying about property management. Additionally, it allows HNIs to spread their investments across multiple assets and locations, reducing risk.

Potential Risks to Consider

While fractional ownership offers an accessible way to invest in premium real estate, it’s not without risks. Here are some key challenges investors should be aware of:

1. Liquidity Issues – Exiting May Take Time

Unlike stocks, which can be sold instantly on an exchange, selling a fractional share of real estate takes time. There is no fully developed secondary market for fractional ownership in India yet, meaning investors may have to wait months or even years to find a buyer for their share. Some platforms offer internal resale options, but these depend on demand, and you may have to sell at a discount if liquidity is low.

2. Regulatory Changes – Uncertainty in SEBI Rules

The Securities and Exchange Board of India (SEBI) is working on new regulations for fractional ownership platforms. Since the industry is still in its early stages, platforms currently operate without a standardized regulatory framework. Future SEBI guidelines could bring stricter compliance rules, which might affect how these platforms function or how easy it is for investors to exit. Investors should stay updated on regulatory developments to avoid unexpected changes that could impact their investments.

3. Platform Reliability – Risk of Fraud or Mismanagement

Not all fractional ownership platforms are well-regulated or trustworthy. Since these platforms manage investor funds and properties, there is a risk of:

• Poor property management leading to reduced rental yields.
• Delayed pay-outs or misallocation of funds.
• Lack of transparency in financial reporting.
• Fraudulent schemes misusing investor money.

To mitigate this risk, investors should only use SEBI-compliant platforms that provide clear ownership structures, third-party audits, and transparent financial reporting.

4. Lower Control Over Investment Decisions

Unlike direct property ownership, where you decide how to manage your asset, fractional ownership places decision-making power in the hands of the platform or asset management company. This means:

• Investors can’t choose tenants or negotiate lease terms.
• Maintenance, renovations, or resale are decided by the majority or management team.
• Investors must trust the platform’s expertise in handling the property.

For those who prefer direct control over their real estate investments, this may be a drawback.

5. Market Fluctuations & Economic Risks

Real estate values are subject to market trends, economic conditions, and government policies. Some factors that may impact returns include:

• Declining demand for commercial spaces due to remote work trends.
• Economic downturns, reducing rental yields and property appreciation.
• Government policies, such as new property taxes or zoning laws, affecting valuations.

Since real estate is a long-term investment, investors should be prepared to hold their shares even during market downturns.

6. Hidden Costs & Tax Implications

Fractional ownership platforms often charge management fees, transaction fees, or performance fees that reduce investor returns. Additionally:

• Rental income is taxable in India.
• Capital gains tax applies when selling fractional shares.
• Some platforms charge exit fees when investors sell their share.

Before investing, it’s important to read the fine print and calculate the true cost of ownership to avoid surprises.

Explore: Is Fractional Ownership Legal in India? Key regulations you need to know.

The Verdict

Fractional ownership is rapidly shaping the future of real estate investment in India. Its promise of greater accessibility, diversification, and steady passive income is resonating with a broad spectrum of investors.

With new regulations on the horizon designed to further secure investor interests, this innovative model offers an enticing way to enter the market with lower capital outlay and minimized risk.

Platforms like Per Annum Estates are spearheading this revolution, empowering new-gen, tech-savvy investors to harness the benefits of fractional ownership and build wealth in a safer, more transparent environment. For those looking to break into real estate without the traditional constraints, fractional ownership stands out as a smart, forward-thinking option.