In recent years, a new and innovative investment concept has gained popularity among individuals looking to diversify their portfolios and gain access to real estate investment without bearing the burden of full ownership.
This concept is known as fractional ownership.
In this blog post, we will explore what fractional ownership is, how it works, and the benefits and considerations associated with this modern investment approach.
What is fractional ownership?
Fractional ownership is the ownership of a portion or fraction of an asset, such as real estate, private jets, yachts, or artwork.
Investors can buy a fraction of the asset and share the ownership and expenses with other investors.
Fractional ownership is typically managed by specialised companies that provide management and maintenance services.
How does fractional ownership work in properties?
First, you choose your choice of property to invest in among the options provided by the fractional ownership platform.
Second, you buy a piece of property which interests you. In UAE, you can own a maximum of 30% of the property if you opt for fractional ownership.
Third, once the property is fully funded, a Special Purpose Vehicle (SPV) will be created. Granting you and other investors official ownership.
Fourth, the management company will manage and list the property, which can enable a regular flow of monthly rental revenue for you. You generally have the choice to either reinvest or withdraw the funds.
Fifth, after the lock-in period, you may decide to retain, sell, or withdraw your ownership. Until then, enjoy the passive income stream!
Benefits of fractional ownership in real estate
- Access to properties that would otherwise be too expensive or impractical to own outright.
- Diversification of investment portfolios, as investors can own fractions of different properties.
- The platform or a professional organisation typically takes care of property management and maintenance tasks, freeing investors from these responsibilities.
- Potential for passive income or capital appreciation if the asset is profitable or appreciates in value.
Considerations for fractional ownership in real estate
Despite its benefits, fractional ownership also has some considerations that investors should be aware of, such as:
- Limited control over the property, as decisions regarding the asset are usually made by the management company.
- Property values are subject to fluctuations, and fractional ownership returns depend on market conditions. Consider the potential risks and rewards associated with this asset class.
- When it comes to fractional ownership, your choice of platform or syndicate is critical. Do your due diligence and research the platform’s track record, reputation, and security measures to ensure the safety of your investments.
How can PRYPCO help you?
PRYPCO has launched a platform that enables individuals to have fractional ownership of properties in the UAE.
By investing as little as AED 2000, you have the advantage of increased flexibility, diversification, and affordability.
Investing in properties allows you to generate monthly rental income while buying and selling Blocks from anywhere in the world.
Fractional ownership has disrupted traditional ownership models, democratising investment access to high-value assets and providing new investment opportunities.
These benefits are more than enough reasons for you to invest in fractional ownership.
