What is fractional ownership in real estate?

By Da alohas | Share :

Imagine having a vacation home that you do not entirely own? Sounds different? Yes, this concept is comparatively new in India. Fractional ownership in India is the type of ownership where are property co-owned by two or more people.

The property is co-owned, so the responsibilities are also equally shared. Fractional ownership offers flexibility to all the owners. They can enjoy the property whenever they want and rent it out in the leisure phase. 


These homes are beneficial for every owner. Having a vacation home in a beautiful location is a blessing. 


Concept of Fractional Ownership


In a fractionally owned property, every shareholder shares equal money in a property and equally enjoys the rights of the property. The property's benefits include income sharing, priority access, usage benefits, and reduced rates.


Overall, the concept of fractional sharing is beneficial for all the co-owners. This concept of fractional ownership is applied to investment in expensive assets such as aircraft, sports automobiles, or a vacation home. Fractional ownership also offers an opportunity for the distribution of risk.


It is a kind of safe investment as when the asset's price is increased, the value of a share of each shareholder also increases. 


The function of Fractional Ownership


When a property gets rented out in fractional ownership for profit sharing, it operates as an investment property. Typically, co-owned holiday property is managed by a property management firm. 


The property management firm is responsible for regular maintenance of the holiday home and food restocking. The business of luxury resorts and vacation homes is now changing in India. The concept of fractional ownership attracts potential owners who are already eager to invest in luxury homes.


Fractional ownership allows the owners to partly own property by paying a fraction of the entire cost. This concept has been in practice since the late 1960s. However, this concept is ever-changing. The business of hotels and resorts in India is very diverse due to high competition. 


Adhesion in Fractional Ownership


Fractional ownership attracts many new investors to invest in high-value assets, including luxury commercial and residential properties. This concept has particularly helped middle-income investors to generate multiple income sources with smaller investment budgets.  


This concept is already popular in the USA and Europe, while many Indian start-ups adopt this notion to generate revenues. The urge to earn more with a small investment has led to the success of this business model. However, all these concepts are established in western countries. 


The emergence of New Players in the Game


This concept of fractional ownership in real estate has attracted various small investors. These small investors club together to make an investment in luxurious Grade A commercial and residential properties. 


Several organized business firms are now getting into this business. This business model has a safe investment plan where the return is fixed. The recent establishment of new start-ups and businesses in this sector has widened the scope of this business. The warming up in this sector has made it more interesting.  




Typically, Indians do not wish to share a property with people other than their family members. However, in recent times the scope has widened. Initially, this scope was wholly restricted to commercial properties, but it has spread to residential properties.  


To be more precise, fractional investment in a property is very safe. It has several benefits, such as small investment and less tension about the maintenance of the property.  


Choosing fractional ownership in India has now become a trend. Therefore, it is clear that owning a second home is a difficult task. But when the ownership is shared with other people, then the risk and management of the property are divided. 


Owning a certain percentage of a property is safe to invest in a second home. If you wish to buy a second home, consider this method of purchasing. It is safe and secure to invest in second homes.


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