Buying a luxury second home in a coastal hotspot like Goa is a dream for many, but high-ticket sizes, upkeep costs and limited personal use often make outright ownership impractical. Fractional ownership is emerging as a compelling alternative, allowing buyers to co-own premium holiday homes or income-generating assets at a fraction of the cost.

With professional management, shared expenses and clearer regulation under SEBI’s SM-REIT framework, the model is increasingly appealing to both lifestyle-led buyers and return-seeking investors, according to a report by The Hindustan Times.

Owning a second home outright often comes with heavy maintenance costs and time commitments, from property upkeep to tenant management. Fractional ownership eliminates this burden. Maintenance, operations and overheads are professionally managed and costs are shared among co-owners.

For investors who want to use the property occasionally for themselves, friends or family, without the pressure of renting it out year-round, fractional ownership strikes a balance between personal use and returns. It caters equally to lifestyle-led buyers and investors seeking steady income.

What is fractional ownership?

Fractional ownership allows multiple investors to co-own a real estate asset, such as a luxury holiday villa or a floor in a commercial building, by splitting the purchase cost. Ownership is typically structured through a special purpose vehicle (SPV), with each investor entitled to a proportionate share of rental income and sale proceeds.

According to industry experts, investors can earn annual rental yields of around 7–9%, along with capital appreciation of 8% or more, while also enjoying limited personal usage of the property each year.

How fractional asset platforms are reshaping the model

Digital fractional ownership platforms have blended prop-tech with wealth-tech. Investors can co-own premium assets without dealing with tenants or paperwork. Dashboards track occupancy, rentals and performance, while technology such as AI-driven valuations and blockchain-based records has improved transparency.

While the concept isn’t new, its positioning has evolved. Once associated with resort-style timeshares, fractional ownership has emerged as an investment product appealing to younger, data-driven investors comfortable managing assets online.

Regulatory clarity

A key concern around fractional ownership was regulation. That changed in March 2024, when SEBI amended REIT regulations to introduce Small and Medium REITs (SM-REITs), bringing fractional ownership platforms under a regulatory framework.

What kind of returns can investors expect?

Returns vary by asset quality. Stable commercial properties typically deliver 8–10% annual yields, while niche segments such as warehousing may offer higher returns. After platform fees and taxes, net yields generally settle between 6% and 7%.

For fractional holiday villas, investors can expect annual yields of 7–9%, along with year-on-year capital appreciation of 8–15%. However, platform and management fees mean net rental income is usually lower than that of a fully owned property, say experts.