Square Yards forays into biz of facilitating fractional ownership of real estate to investors

Proptech firm Square Yards has entered into the business of facilitating investors in having fractional ownership of rent-yielding real estate assets and earn 14-18% annual return on their capital.

PropsAMC, the asset management services and data intelligence arm of Square Yards, has launched fractional ownership real estate investment platform backed by proprietary data and analytical capabilities, the company said in a statement.

Square Yards, which is mainly into brokerage service of properties and home loans, is targeting to build $ 1 billion worth of AUM (Assets Under Management) of fractional ownership properties over the next three years.

The minimum ticket size to participate will be ₹25 lakh. Most of its products will not have any lock-in for investors.

The platform will enable investors in having fractional ownership of leased and pre-leased commercial assets including warehouses, holiday homes and schools. It will also explore opportunities with high coupon pay-outs on secured assets in residential space. It will target cities like Mumbai, Thane, Pune, Bengaluru, Gurugram, Noida, Chennai and Goa.

Many start-ups and financial services firms, including start-up hBits and MYRE Capital, have entered into the business of enabling fractional ownership.

“India’s commercial real estate market has for long been dominated by high net-worth individuals and institutions. Fractional investing aims to break this status quo by making commercial property investing affordable for the average Indian,” said Tanuj Shori, Founder and CEO, Square Yards.

With Square Yards’ fractional ownership real estate investment programme, he said, investors can build a diversified portfolio at a lower acquisition cost.

“With rental yields of 7-9% per annum, enhancement of yield by rent appreciation of 4-5% and finally the capital appreciation of 5-8% every three years, fractional investment is the reigning instrument of good faith at present to perform at 14-18% per annum,” Mr. Shori said.

All net income generated from the underlying property will be collected in the designated escrow account and distributed based on the investment and area owned by the investor.

Square Yards offers full real estate services from search and discovery, and transactions to home loans, rentals, property management, and post-sales services.

It has clocked more than two-fold jump in revenue to ₹271.2 crore during the first six months of this fiscal year. The revenue stood at ₹128 crore in the corresponding period of the previous year.