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How fractional ownership is different from REITs

Demand for Indian commercial real estate is also evident in the recent over-subscription of India’s first REITs (Real Estate Investment Trusts), raising ₹4,750 crores (US$ 679.64 million). While this robust response clearly demonstrated to investors — domestic and international — that the Indian commercial property market is ready for bigger and more players, REITs have their own disadvantages as well. The concept of REITs is similar to that of mutual funds, pooling money from many investors to purchase or finance income-producing properties, including both residential and commercial realty. The returns paid to investors come from the monthly rents, so there is a steady flow of income.

However, unlike fractional ownership, REITs do not offer much in the way of capital appreciation. And similar to mutual funds, REIT investors cannot choose the particular properties that their money is poured into. Fractional ownership, on the other hand, provides complete control of both, asset selection and diversification. Over time as well, investors gain from both regular rental yield, as well as study capital appreciation.

hBits ensures that investors enjoy complete access and transparency when it comes to their properties. All the information is live and accessible at the click of a button on the hBits digital platform. Not only can investors take virtual tours of the property, but they can also securely buy and sell their share of the property on the same platform. In addition, hBits only offers the best Grade A commercial properties that are completed and pre-leased, reducing the risk but ensuring high returns, unlike REITs, which invest in all kinds of properties. With this win-win formula of low risk and high returns, fractional ownership can be said to be similar to debt instruments and term insurance, while REIT is most similar to mutual funds, which can offer good returns but can also be more volatile.