By Amrita Singh
It is a truth universally acknowledged that most investors are in want of a diversified portfolio. With one lakh rupees, you can build a diversified portfolio of stocks or bonds or mutual funds or commodities or even have all of them in a single portfolio. But what about real estate? Investing in real estate has traditionally meant making a huge financial commitment in the form of tens of lakhs of rupees or even crores to purchase only a single property. Diversification would mean buying multiple properties in different locations and that would only increase the capital requirement. What can the small sum of one lakh rupees do here?
Actually, quite a lot! It can help an investor gain exposure to a variety of real estate assets located in top Indian cities. For example, a one lakh rupee investment can be spread across an apartment in Bengaluru, a holiday home in Goa, a commercial building in Mangaluru and prime land in Hyderabad.
Digital real estate platforms like Alt DRX have made this possible through the fractional ownership model. This model breaks down the financial value of a property into smaller units (tokens/digital sq. ft) and then these units are made available for purchase to investors. For example, a 5,000 square foot property worth Rs. 5 crores in Bengaluru could be split into 5,000 units with each unit representing one sq. ft of property and being worth Rs. 10,000. Investors can buy units of different properties in different cities and build a diversified real estate portfolio with only a small fraction of the capital needed to purchase an entire property. They get returns in the form of rental income (proportional to their shares) and the value appreciation of their properties. These transactions are done and recorded through blockchain technology - making them efficient, transparent and secure.
Holding fractional interests in multiple properties in different cities can reduce the overall risk of a real estate portfolio as the poor performance of one property can potentially be offset by the better performance of another. It also changes the way people invest in real estate - instead of waiting until they can purchase an entire property, investors can start small and gradually add more properties to their portfolio as their investment capacity grows. Instead of being limited to being a one-time, high-value purchase, real estate becomes a way to save money on a monthly or even daily basis.
One lakh rupees is definitely not enough to buy a property in a major Indian city. But through digital fractional ownership, it can be the starting point of gaining exposure to different types of real estate assets across various locations. Technology is not only lowering the capital requirement to enter the property market but also changing how investors approach investing in real estate. It is no longer about saving enough to buy a single property but about building a diversified real estate portfolio, one square foot at a time.
