With sluggishness creeping into
the real estate market due to the ongoing economic slowdown, a
Canada-based group has come up with a unique real estate investment
model, which allows investors to purchase fractional ownership in
multiple homes, instead of one, which according to the promoters not
only significantly divides the risk factor, but also assures more bang
for the buck.
Speaking to IANS on the sidelines of the Vibrant
Goa investment conclave held near Panaji, Vijay Thomas, founder and
chief executive officer of Tangentia Ventures, said the concept of
fractional ownership newly introduced in India by FOHO.Haus, a
subsidiary of his Canada-based company, works well in tourism
destinations like Goa as well as metros, where investors want to
purchase second homes, which are used by them occasionally.
the sluggishness in the real-estate market, people's investments are
not only costlier, but riskier as well. This means in most cases; you
would be investing by taking a mortgage or take a loan. You are
basically also not profiting as much because you're buying more than you
need. In case of fractional ownership, you are buying what you need.
You will only be needing a second home for a few weeks. So I would say
you are not over-buying a home, you're buying as much home as you need,"
Thomas told IANS.
"Also if you buy this house using fractional
ownership as an investment, the money you are putting in is way less, so
this would be a better risk than an investment in an entire home or
even in mutual funds. I would say there is bigger risk in investing in a
whole house, than investing in 10 houses," said Thomas, an alumnus of
the Goa Institute of Management, the coastal state's best B-school.
Ownership, as an investment strategy, first came into vogue around
three decades ago, when globe-trotting businessmen collectively pitched
in to co-own ultra-expensive business jets.
According to Thomas,
the concept of fractional ownership in the real estate has been
prevalent in the US and Europe for the last couple of decades, where the
model was used to purchase holiday homes at sought-after addresses like
the Hamptons in Long Island, US, or Muskoka in Ontario, Canada.
Fractional Ownership model designed by FOHO.Haus, enables a person to
own a fraction of a house or a property with 12 other individuals, who
have similarly opted to. This collective of individuals not only end up
physically owning a share of the freehold of the property as an asset -
the bricks and mortar, but when one or all of them are ready to sell it
at any point in time, there is a realistic shot at making a profit.
owners can choose four week-long occupancy packages at the time of
signing up and FOHO.Haus offers a guaranteed buy back too in case, a
co-owner wants to opt out.
"So in essence, we are delivering second homes with democratic policies, or essentially democratic second homes," he said.
are the first to introduce fractional ownership homes in India with
properties presently in Goa, Kerala, Delhi and Mumbai. we plan to expand
this to Maldives, Sri Lanka and other destinations beyond India as
well," he said.
Tourism destinations like Goa, he says are most
conducive for the model of fractional ownership, along with other urban
hubs like Delhi and Mumbai.
"Tourist destinations are most
favourable. Take Goa for example. Most travellers from India and abroad
have heard of Goa and want a slice of what the state has to offer. The
Goan diaspora are keen to invest and own property here... Certain weeks
in the year, wherein owners do not make use of the home, the homes can
be made available for daily rentals, which will translate into a revenue
share for the owners. The owners keep 80 per cent of the revenue," he
said, adding that FOHO.Haus already has four properties in the coastal
state and it plans to obtain 100 properties in India in the next three
years hoping to get 1,200 factional owners onboard.
"We plan to expand to other tourist destinations as well such as Portugal, Spain, Maldives and Sri Lanka," Thomas also said.