Traditionally, direct investment in office spaces, warehouses, and retail properties demanded crores in capital and significant legal and management overhead.
But thanks to evolving digital platforms and regulatory clarity on the horizon, investors can now own a slice of institutional-grade assets starting with just Rs 5–10 lakh.
As of 2025, India’s fractional real estate market is estimated to be worth around $500-600 million, suggest experts, and is growing rapidly.
With recent regulatory changes and robust growth projections, here are 10 key things investors should know about this evolving market:
1. What is Fractional Real Estate?
Fractional real estate is an innovative model where multiple investors collaboratively own a share or “fraction” of a high-value property, typically focusing on commercial real estate.This approach democratises access to premium properties that would otherwise demand substantial individual capital for outright purchase, making lucrative real estate investments more attainable for a broader spectrum of investors.
2. Significant Market Growth, Especially in India:
The fractional ownership market is experiencing robust growth globally, currently valued at approximately $8 billion, as highlighted by Kunaal Shah of Trilegal.
In India, this market is rapidly expanding, with estimates placing its current value between $500 million and $600 million, according to both Kunaal Shah and Harsh Parikh, Partner at Khaitan & Co.
Parikh notes that India is “catching up” to the global market, and SEBI’s introduction of the SM REIT Regulations in 2024 further underscores this strong demand.
Shah anticipates a significant surge in the Indian market, projecting it to reach $5 billion to $5.5 billion over the next 8–10 years, signalling immense potential for investment and expansion.
3. SEBI’s Regulatory Framework is Here:
Previously operating in a largely unregulated space, the Securities and Exchange Board of India (SEBI) has now introduced crucial amendments to the REIT Regulations to bring Fractional Ownership Platforms (FOPs) under a formal and structured framework.
A pivotal change is mandated by the SEBI Real Estate Investment Trusts (Amendment) Regulation, 2024, which stipulates that any platform offering fractional ownership must now register as a Small and Medium REIT (SM REIT), thereby enhancing regulatory oversight.
4. Enhanced Investor Protection is a Priority:
SEBI’s new regulations are designed to provide a robust safety net for investors in the fractional real estate space. Harsh Parikh of Khaitan & Co. outlines key mandates aimed at safeguarding investor interests: investment managers are now required to possess a net worth of at least Rs 20 crore and demonstrate a minimum of two years’ experience in the real estate industry.
Crucially, at least 95% of the funds acquired can only be invested in completed assets that are already generating rental income, thereby eliminating the ability to invest investors’ money in riskier, under-construction properties.
Also read: Market to perform well in mid-long term; small & midcaps attractive post dips: Harshad Patwardhan
5. Transparency and Disclosures are Mandated:
To further protect investors and ensure market integrity, Kunaal Shah explains that SM REITs are now subject to stringent transparency and disclosure requirements.
“These platforms are mandated to conduct independent valuations of their assets at least twice a year and provide comprehensive disclosures,” he said.
This includes detailed information regarding asset ownership, financial performance, associated risks, and any potential conflicts of interest.
Additionally, SEBI has enforced strict KYC (Know Your Customer) and anti-money laundering protocols, along with regulatory oversight and robust grievance redressal mechanisms.
6. Lower Entry Barrier and Diversification:
Fractional ownership significantly reduces the capital required to invest in real estate, making high-value commercial properties accessible even for retail investors who might otherwise be priced out of the market.
This model also facilitates portfolio diversification, allowing investors to spread their capital across multiple properties, locations, and asset types—such as commercial offices, residential units, or warehouses—thereby effectively mitigating concentration risk.
7. Potential for Passive Income and Appreciation:
Investing in fractional real estate offers the dual benefits of potential passive income and capital appreciation. Investors can earn regular rental income from leased properties.
“Fractional ownership, on the other hand, may offer potentially higher returns, but these can be more variable and come with longer holding periods,” says Shah of Trilegal.
“Fractional ownership allows investors to directly co-own a specific property, giving them the flexibility and control to choose the asset they invest in,” he said.
Also read: HDB Financial’s pre-IPO lottery backfires. Are unlisted stocks not worth the hype?
8. Professional Management is a Key Benefit:
One of the significant advantages of fractional ownership is the professional management of the underlying assets. Fractional ownership platforms or their appointed property management companies assume responsibility for all aspects of property maintenance, tenant relations, and legal compliance.
9. Taxation:
Investing in fractional real estate provides a diversified portfolio option for investors with limited capital. It is crucial to understand the taxation aspects associated with such investments to maximise returns and ensure compliance with tax regulations.
“Tax on rental income and capital gains tax derived from fractional real estate should be considered from an investment perspective,” says Shah of Trilegal.
“The tax treatment for different taxpayers, such as individuals, companies, LLPs, discretionary trusts, and family offices, can substantially vary, considering the different rates of surcharge and cess applied to each such category depending on the nature of income earned,” he added.
10. The Future Looks Promising:
The confluence of increasing demand for alternative investment avenues, rapid technological advancements within the PropTech sector, and SEBI’s clear regulatory framework is positioning fractional real estate for substantial growth in India.
(Disclaimer: Recommendations, suggestions, views, and opinions given by experts are their own. These do not represent the views of the Economic Times)
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