The concept of fractional ownership in real estate is rapidly gaining traction in India, as evidenced by the recent success of RealX’s Ayodhya commercial land property deal. This milestone saw participation from 57 investors who contributed between Rs 50,000 and Rs 25 lakhs to acquire proportionate ownership rights in the property.
This initiative marks a significant step towards democratizing access to high-value real estate through fractional ownership and property tokenization. RealX’s strategic partner, Fundbezzie, played a crucial role in facilitating this deal. Fractional ownership addresses the prohibitive costs associated with owning expensive assets such as real estate, yachts, and private jets. Traditional ownership models require significant capital outlay and ongoing maintenance expenses, which can be unaffordable for many individuals. By distributing these costs among multiple investors, fractional ownership enables individuals to experience high-value assets without bearing the full financial burden. This model also encourages diversification and risk mitigation, thereby enhancing potential returns for investors.
RealX distinguishes itself by offering direct property rights to investors, bypassing the conventional Special Purpose Vehicle (SPV) route commonly used by other fractional ownership platforms. RealX provides two ownership modes: Registered Co-ownership and property tokens on the blockchain. Registered Co-ownership makes the investor a direct co-owner of the property, while property tokens grant direct and legal beneficial rights through a signed legal note. This innovative approach to tokenization of real-world assets holds immense promise, particularly in light of the global regulatory clampdown on cryptocurrencies. RealX has positioned itself as a leader in this space, evidenced by its successful tokenized sales in the Ayodhya property deal. The fractional ownership of real estate in India is evolving at a rapid pace, with the market expected to reach Rs 4,500 billion by 2026.
Currently, there are 200 million sq ft of Grade A office space available for fractional ownership. According to Deloitte, real estate tokenization was valued at $2.7 billion in 2022 and is projected to reach $1 trillion by 2030. The Boston Consulting Group estimates that the total size of illiquid asset tokenization, including real estate, could reach $16 trillion by 2030. In India, the real estate market is expected to reach $1 trillion by 2030, with fractional ownership and tokenization playing a significant role in this growth trajectory. As fractional ownership continues to gain popularity, it is poised to transform the Indian real estate landscape, making high-value properties accessible to a broader audience. This innovative approach not only offers a viable solution to the high costs of traditional ownership but also opens new avenues for investment and growth in the real estate sector.
