Sebi unveils new framework for fractional ownership of real estate

November 26, 2023 

Sebi’s new framework for fractional ownership of real estate to enhance investor security

The Securities and Exchange Board of India (SEBI), during its board meeting on Saturday, made several decisions, including those related to fractional ownership, with the overarching goal of protecting the interests of investors.

The move is aimed at regulating the real estate fractional ownership segment, which the industry experts termed as a ‘positive and necessary step’.

Saurabh Vohara, Founder and CEO at ALYF — India’s first technology-enabled marketplace that makes holiday home ownership commercially accessible through its smart ownership model — applaud SEBI’s action for enhancing transparency, investor security, liquidity, and seamless exit options within the fractional ownership realm.

“This move holds the potential to create a dual positive impact: formalising fractional ownership as an investment class, thereby attracting a segment of portfolios towards a larger market, and fostering the supply of hospitality assets to meet the escalating demand in the travel and hospitality sectors,” Vohara said.

Shravan Gupta, Founder and CEO of YOURS, a platform for fractional ownership of luxury second homes, said this move signifies the strengthening of the segment and reflects increasing demand from investors.

“The guidelines proposed by SEBI are crucial for formalizing the sector, instilling investor faith, and addressing the complexity of Special Purpose Vehicle (SPV) securities issuances. Particularly beneficial for retail investors unfamiliar with such structures, the regulation is anticipated to contribute to the growth and acceptance of this innovative form of property ownership, aligning with established practices in developed nations,” he said.

It is believed that with the new framework, the fractional ownership industry is all set to see a remarkable transformation.

[The Financial Express]