India’s fractional ownership market to exceed $5 bn by 2030; Mumbai, Delhi NCR hotspots for SM-REIT investment: Report

Mumbai and Delhi NCR have emerged as top hotspots for asset acquisition opportunities under the SM REIT umbrella as both these micro-markets cumulatively account for nearly 50 percent of the SM-REIT worthy assets across the top seven cities

The fractional ownership market in India is projected to grow over 10 times and exceed $5 billion by 2030, according to a report by JLL – Property Share. The report identifies Mumbai, Delhi NCR, and Bengaluru as prime cities for Small and Medium Real Estate Investment Trusts (SM REIT) investment prospects.

Fractional ownership is a concept where multiple investors collectively own a share or fraction of a high-value asset, such as real estate, without having to buy the entire property.

Mumbai and Delhi NCR have emerged as top hotspots for asset acquisition opportunities under the SM REIT umbrella as both these micro-markets cumulatively account for nearly 50 percent of the SM-REIT worthy assets across the top seven cities, the report said.

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The top seven micro-markets of India include Mumbai, Delhi NCR, Bengaluru, Chennai, Hyderabad, Kolkata and Pune. Bengaluru and Hyderabad follow with of 15 percent and 11 percent shares, respectively, the report stated.

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It said that in India over 328 million square foot (msf) of office assets, valued at $48 billion are SM-REIT worthy. Mumbai has highest 84.4 msf of SM-REIT worthy stock while Delhi has 71.7 msf stock followed by Bengaluru at 50.7 msf of SM-REIT worthy stock. Kolkata has lowest 22.9 msf of SM-REIT worthy stock.

The SM-REIT investment potential in Mumbai, Delhi NCR and Bengaluru is $18.7 billion, $9 billion and $7.2 billion, respectively, the data by JLL-Property Share showed.

Samantak Das, Chief Economist & Head of Research and REIS, India, JLL, said that Mumbai presents unparalleled opportunities for SM REITs, offering a healthy mix of well-leased large and mid-sized assets ideal for acquisition by fractional ownership platforms (FOPs).

“The robust demand for rent-yielding assets and the presence of a professionally managed platform makes SM REITs an enticing choice for retail investors. Considering the high capital values in Mumbai, SM REITs prove to be a superior option over smaller office formats, eliminating the increased costs associated with acquiring and managing such properties,” he said.

Gurugram dominates the Delhi NCR office segment, capturing 61 percent of the SM REIT market. Commercial corridors of Golf Course Extension, Golf Course Road, and MG Road present a USD 3 billion investment potential for SM REITs. The NH-8 corridor is also promising, with around 6 msf of SM-REIT worthy assets amounting to a USD 1 billion opportunity.

In Bengaluru, the biggest corridors are the ORR Southeast stretch and Whitefield in terms of physical asset availabilities. Quality opportunities also exist within the off-CBD corridor stretching from Koramangala to peripheries along the Bannerghata Road and Mysore Road, where a host of small to mid-sized commercial office projects are available for potential investments under SM-REITs.

Hyderabad also offers healthy opportunities for SM REITs. The market is led by assets in the Hitec and Gachibowli corridors, which account for 84 percent of the available potential, representing a $3.7-billion opportunity.

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Kunal Moktan, Co-founder & CEO, Property Share said, "Through the SM REIT regulations SEBI has effectively introduced an entirely new asset class to the retail and institutional investor universe. SM-REITs provide a tremendous opportunity to monetize income generating assets. As a FOP platform, Property Share will try and play its part in ensuring the success of these regulations and bringing exciting investment opportunities to the market.”