Property Share, a Fractional Ownership Platform, Receives First SEBI License for SM REIT

Property Share Makes History with SEBI’s First SM REIT License

On August 9, Property Share, a leading fractional ownership platform, made headlines by becoming the first of its kind to receive a Small and Medium Real Estate Investment Trust (SMREIT) license from the Securities and Exchange Board of India (SEBI). This landmark achievement underscores the platform’s pioneering role in the real estate sector and sets a new precedent for fractional ownership models in India.

SEBI License and Future Plans

Property Share has announced that it will serve as the investment manager for the Property Share Investment Trust (PSIT). This significant development marks a major milestone for the platform, as it embarks on a new chapter of growth and innovation in the real estate investment landscape. According to the company's statement, Property Share has been granted a license under the newly introduced SM REIT regulations, which are designed to govern fractional ownership platforms within a structured regulatory framework.

The SM REIT license granted to Property Share enables it to manage and operate the PSIT, providing a regulated investment vehicle for fractional ownership. This move is expected to enhance the transparency and credibility of fractional real estate investments, offering investors a more secure and regulated way to participate in the real estate market.

As part of its strategic expansion, Property Share plans to file for its initial SM REIT scheme. This inaugural scheme will focus on a ₹330 crore fully-leased commercial property located in Bengaluru. The choice of Bengaluru, a major commercial hub, reflects the company’s confidence in the city’s robust real estate market and its potential for high returns on investment.

Understanding SM REIT Regulations

The introduction of SM REIT regulations by SEBI in March 2024 represents a significant shift in the regulatory landscape for real estate investments. These regulations aim to integrate fractional ownership platforms (FOPs) into the broader REIT framework, creating a subclass of REITs specifically for assets valued between ₹50 and ₹500 crores. This regulatory framework provides a structured and transparent approach to managing fractional ownership investments, ensuring that these vehicles adhere to SEBI’s standards of governance and disclosure.

SM REITs, much like traditional REITs, are subject to SEBI’s comprehensive regulatory oversight. Units of SM REIT schemes are listed on stock exchanges, allowing investors to buy and sell units with ease. This transparency and liquidity make SM REITs an attractive option for investors seeking exposure to real estate without the complexities of direct property ownership.

What is Fractional Ownership?

Fractional ownership is an innovative investment model that allows individual investors to co-own commercial or residential properties. Unlike traditional real estate investments, which often require significant capital outlay and management responsibilities, fractional ownership enables investors to acquire a share in a property through special purpose vehicles (SPVs) or private limited companies. This model democratizes access to high-value real estate assets, allowing investors to benefit from rental income and capital appreciation without the need for full ownership.

By pooling resources, fractional ownership platforms make it possible for investors to participate in premium properties that might otherwise be out of reach. This approach not only provides access to attractive investment opportunities but also diversifies the risk across multiple investors, reducing the individual exposure to market fluctuations.

Property Share: A Pioneer in Fractional Ownership

Founded in 2016 by Kunal Moktan and Hashim Khan, alumni of IIM Ahmedabad, Property Share has been at the forefront of the fractional ownership revolution in India. The platform was one of the first to introduce this model for commercial real estate, bringing a new level of accessibility and transparency to the Indian real estate market.

Over the years, Property Share has grown its user base to approximately 300,000 individuals across more than 20 countries on five continents. This impressive global reach reflects the platform’s success in catering to a diverse audience and its ability to attract investors from various markets.

In June 2022, Property Share further cemented its position as a leader in the industry by raising ₹347 crore in a Series B funding round led by WestBridge Capital. This substantial investment has fueled the company's expansion plans and supported its efforts to innovate and enhance its offerings.

The Impact of SEBI’s SM REIT Regulations

The introduction of SEBI’s SM REIT regulations is expected to have a transformative impact on the real estate investment landscape. By providing a regulated framework for fractional ownership, SEBI is fostering greater transparency and accountability in the sector. This move is likely to attract more investors, both retail and institutional, to the fractional ownership model, further accelerating its growth.

For Property Share, the SEBI license and the launch of the Property Share Investment Trust (PSIT) represent a strategic opportunity to leverage its expertise and expand its footprint in the market. The company's focus on high-value, fully-leased commercial properties aligns with its commitment to delivering attractive returns and building long-term value for its investors.

Looking Ahead

As Property Share embarks on this exciting new phase with its SM REIT license, the company is poised to drive further innovation and growth in the fractional ownership space. The combination of regulatory support, strategic investment, and strong market presence positions.Property Share to continue its leadership role in reshaping the real estate investment landscape.

With its focus on expanding its portfolio and enhancing investor access to premium real estate assets, Property Share is well-positioned to capitalize on the growing demand for fractional ownership and contribute to the evolution of the real estate investment market in India and beyond.