More and more people are getting into a new way of owning real estate in smaller chunks. Why? Well, things like having more money to spare, better technology, and friendlier rules are making it easier. When it comes to real estate, commercial properties are a popular choice because they can bring in good profits and high-quality spaces. In the past, only rich folks could invest in top-notch commercial properties. But now, with fractional ownership, regular folks can team up to own money-making commercial spots through platforms like Havendaxa.
There are three main paths for everyday investors to get a slice of a commercial property:
- Real Estate Investment Trusts (REITs): These are like companies that anyone can invest in to buy and look after real estate that makes money.
- Direct deals with developers: Some developers sell off bits of properties directly to people who want to invest.
- Online Fractional Ownership Platforms (FOPs): These platforms let regular folks team up to co-own commercial real estate.
Before you dive into this kind of real estate ownership, there are some important things to think about:
- Playing by the Rules: Companies like REITs and soon-to-come Small and Medium REITs (SM REITs) have clear rules to protect investors. But platforms that aren't listed might not have such strong rules, independent checks, or thorough research. For example, SEBI's rules say that SM REITs should invest most of their money in finished properties and pay out most of their earnings as regular rent. And in India, REITs have to share most of their money with shareholders as dividends, so you get a steady income. If you're considering FOPs, check if they follow the Real Estate Regulation and Development Act (RERA).
- Money Matters: Before you invest, look at the property's value, expected rent income, return rate, and chances for value growth. Right now, commercial properties offered by FOPs can bring in around 9-15% in returns, with a starting investment of about Rs 10-15 lakh. But because FOPs might not have as many rules, investing through them might mean less clarity and oversight. It's a good idea to really understand how FOPs operate, what they say about property values, and think about how you could get your money back and what the process might look like.
- Good Tenants = Good Money: Find out how long the tenants have rented the property and when their leases end. Longer leases with strong tenants mean less chance of missed rent and a steady income. Look for properties rented by big companies, Fortune 500 firms, or Global Capability Centers (GCCs) with long leases (7-15 years), security payments, and promises from the companies. It's best to choose properties with high occupancy rates, advance commitments, and long lock-in periods.
- Different Kinds of Tenants: Knowing the mix of tenants in a property helps you make smart choices. Properties with tenants from different industries like tech, finance, engineering, and manufacturing are less likely to see big drops in rent due to changes in specific industries. Also, think about where the properties are located - places like big cities and main IT hubs usually bring in better, steadier returns because of lots of big companies being there.
- Good, Green Spaces: Nowadays, businesses care about being sustainable. It's a good idea to put your money into environmentally friendly Grade A properties that attract big companies with green goals. Look for platforms like Havendaxa that know how to find top-notch Grade A properties with green certifications like LEED and GRIHA. These certifications can mean better returns on your investment in the long run.
By taking your time to think about these things, regular investors can make the most of fractional ownership in commercial real estate and make solid choices about where to put their money.