Luxury villas at an affordable price: How fractional ownership is redefining real estate access
When Mumbai-based professional Rohan Singh dreamed of owning a holiday villa in Goa, the ₹2 crore price tag felt beyond his means. Instead of stretching his finances, he invested ₹25 lakh through a fractional ownership platform. His share gives him rights to 30 days of annual stay and hassle-free maintenance. Within two years, the property’s value appreciated by nearly 10 per cent. Rohan says the model works better than buying outright: “I get the lifestyle I wanted without locking up my entire savings. And I don’t have to manage anything.”
Luxury no longer demands deep pockets. Buying a high-end villa is no longer beyond your means. By investing in a fractional property, you can own a share in high-end holiday homes, share maintenance costs, and earn potential returns.
Luxury made more affordable
Luxury usually comes at a high price, but fractional ownership lets you access the same luxury at a much smaller cost. Instead of putting in the full amount needed to buy a property, you only invest a fraction, which sharply reduces the capital required. With new rules treating fractional ownership as an investment rather than a fixed asset, it also becomes more liquid. Plus, investors can use the unused portion of their original budget to diversify into other assets or portfolios.
Shared cost advantage is also a key USP of fractional ownership; assets under fractional ownership are often used regularly and thereby maintained to the highest standards.
“This, when compared to a fully owned second home, stands out in many ways; a fully owned second home’s maintenance cost and burden are not only high but also take away the owner’s time in ensuring its well-being. Fractional ownership completely eliminates the owner’s time investment in maintaining the asset,” says Shravan Gupta, founder and CEO, YOURS, a fractional ownership firm.
Shared model, stable returns
To summarize, fractional ownership brings the following benefits: First is the low cost of investment to own and enjoy an asset that otherwise would involve a very large investment. Second, the owner’s name is always kept discrete, and as such, it brings in the sense of ownership as it would in a typical full purchase transaction. Third, all costs and overheads are shared equally. This also means that it gives room to the owners to recruit the best of housekeeping talent to offer in-house services.
“Finally, it works well for those investors who would like to stay away from renting their second homes and wish to use them for themselves or for friends and family and, at the same time, serves the interest of those investors who look for an ROI on their real estate investment. Thus, it caters to ownership and rental models efficiently,” says Gupta.
For lifestyle-led investors who want the experience of a second home without locking in disproportionate capital or managing year-round upkeep, fractional ownership offers a far more efficient and financially sound entry point into luxury real estate. Conversely, those who seek full control, full-year usage or long-term standalone appreciation may find outright purchase better aligned with their goals.
“Yields earned by a fractional investor after the management fees of the fractional ownership platform and the villa operator can be expected to be anywhere around 7%-9% annually of the total investment amount. But along with this, Y-O-Y investors’ capital can appreciate anywhere around 8%-15%,” says Mananki Parulekar, co-founder, Claravest Technologies, a fractional ownership real estate platform
If you own a villa outright, you do not have to pay any platform fees. So, whatever rent you earn is fully yours.
In fractional ownership, the platform takes charges for managing the property. Because of these fees, your net rental income is usually a bit lower than what a full owner would get.
“Appreciation will be the same as the market appreciation of that asset and location. For REITs, the average yields received from REITs in India are anywhere between 6% and 8%. In case of equity, Nifty 50 has provided historical returns of 10%-12% on average annually,” says Parulekar.
Fractional villas find the middle ground
Therefore, fractional villas occupy a middle-ground position, more lucrative than low-risk debt and often traditional residential assets, while providing a lifestyle benefit that equities and REITs cannot match.
“However, this return potential must be balanced against lower liquidity and higher sensitivity to destination-based economic cycles. The key is for investors to treat fractional villas as a hybrid product: part financial asset, part lifestyle asset. If someone is looking for purely financial, fully liquid, high-yield exposure, a REIT or debt instrument may be more appropriate,” says Gupta.
The liquidity constraint is thus an issue with real estate as an asset class. As fractional shares are not traded on the public market, it takes some time for the fractional ownership platforms to resell the shares.
“When getting into fractional ownership, investors should have a long-term mindset and should also be prepared to wait for two or three months for their share resale after they notify the platforms about their liquidity requirement,” says Parulekar.
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For those who value regular time in a premium holiday home plus reasonable, transparent returns, fractional villas can offer a compelling and realistic proposition.
On the regulation front, every fractional ownership platform must register with SEBI and comply with both SEBI and RERA rules. They need to conduct detailed due diligence on every property they offer. Investors should get full clarity on legal status, valuation, risks and any title issues.
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Fractional ownership thus allows people to invest in a real estate asset. It is a great mix of upgrading your lifestyle and diversifying your investment portfolio. “With fractional ownership, you are earning annual rental returns of about 7% – 9% and annual appreciation of 8%+, and you get a few nights in a year to enjoy with your family and friends for free,” says Parulekar.
Anagh Pal is a personal finance expert who writes on real estate, tax, insurance, mutual funds and other topics
