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Most Indian investors saving for long-term goals like saving for the higher education of their children or building a retirement corpus are usually risk averse and seek guaranteed returns. As a result, the Public Provident Fund (PPF) has found a place in the financial portfolio of most Indians, with generations of India pushing their progeny to put aside funds in PPF as soon as they receive their very first salary.Some conscientious investors have even been known to set aside money in a PPF account as soon as a child is born, so as to ensure that the maturity of the PPF coincides with his higher education! Such has been the faith in PPF.Unsuitable for long-term financial goalsThe major reason why PPF has enjoyed popularity is because of the minimum investment amount of Rs 500 and tax benefits Section 80 C of the Income Tax Act of India. The biggest advantage though is that it carries a sovereign guarantee. But under the present circumstances, the PPF may not be the ideal solution to meet long-term financial goals. Here’s why.From the year 2011, the PPF rates were made variable and linked to the prevailing rate of interest in the economy. This means that the rate of interest on the PPF is set at the beginning of each financial year. While this is advantageous in a rising interest rate scenario, in a falling interest rate scenario (as in the present case) it has the opposite effect. In fact, the interest rate on PPF has been on a steady decline for the past two decades and currently stands at 7.1% from an all-time high of 12% in 2000.Investors looking to make large investments to meet medium to long-term investment goals, such as the higher education of children in 5-10 years or building a nest egg for retirement in a similar time frame are likely to be stunted by the slow pace of growth in a PPF.Consider this- The interest rate on PPF has been the lowest at 7.1% in the past two decades. Add to that the rate of inflation at 4.5%. This means the PPF investment will only grow at a rate of 2.6%. So hypothetically speaking, if an investor were to invest 1.5 lakhs annually over 15 years the maturity value will be in the range of Rs 31 lakhs over the time frame (taking inflation into consideration). This amount may not be enough for the earlier-mentioned life goals.While PPF may still be best suited for a first-time investor looking for a regular investment option, it has some other drawbacks. For instance, a long lock-in period of 15 years, the inability to make even partial withdrawals for the first six years, and an annual cap of Rs 1.5 lakhs on investment make it unsuitable to meet the needs of middle-income investors. What then is the ideal investment option for middle-income investors who wish to meet long-term financial goals with liquidity and safety? The answer lies in an investment option that has not been accessible to retail investors thus far- Commercial real estate through fractional investment.Why fractional investment?For superior returns investors, therefore,&nbsp;<a href="https://www.cnbctv18.com/personal-finance/is-fractional-property-a-better-investment-option-than-ppf-9524761.htm">investors may consider fractional investment in commercial real estate</a>. Fractional investment is recently gaining popularity among the middle class looking for stability and a healthy rate of return. What fractional investment in real estate means is that small investors pool their resources to jointly buy a commercial property.Leading fractional ownership platforms such as hBits are providing the benefits of ownership of Grade A pre-leased assets to retail investors to whom the commercial real estate has been inaccessible thus far due to complex due diligence, time-consuming asset management, and limited exit options.With a low-ticket size of Rs 25 lakhs, retail investors can now have access to superior service from leading proptech platforms such as hBits and earn average rental yields in the range of 9-10% from Grade A real estate properties such as offices, warehouses, and data centers. Such property has also proved its resilience in troubled times.At the peak of the pandemic in 2020, 46% of the total institutional investment in India was in the office market. Over 900 million sq ft of Grade A commercial assets are growing over 40 mn sq ft every year, ensuring a steady supply of premium assets.Further with the scientific and data-driven process of asset selection and management through a completely transparent process, investors can be assured of total safety. Further, fractional ownership provides the advantage of liquidity, unlike PPF. Thus, an investor may choose to liquidate his fraction to a willing investor at any time through proptech platforms. However, experts recommend a holding period of at least five years to make significant gains on investment.Number bear witnessNow let’s consider an example. Say, instead of making an annual investment of Rs 1.5 lakhs in PPF each year, an investor makes an initial investment of Rs 25 lakhs in a Grade A property. Property price grows at an assumed 7% each year (assumed to bring in parity with PPF). In six years, the value would therefore be approximately Rs 38 lakhs.The rental yield for the first three years is assumed at 9% and around 10% from the fourth year (there is an increase in rental yield every 3 years). The total rental income for the period therefore would be Rs 14 lakhs. Therefore, the total return on Rs 25 lakhs investment would be approximately Rs 52 lakhs. This would then suffice to meet life goals such as higher education or saving for retirement in a shorter time frame as compared to a PPF.As is clear from the example above, while PPF comes with a sovereign stamp, the fractional ownership model in commercial real estate is equally safe and stable. Not only does it offer superior returns, but it also comes with the promise of transparency and liquidity from proptech firms like hBits. Investors can thus consider fractional investment in lieu of PPF to meet their financial goals.

Achieve financial success. Learn the pros and cons of PPF vs fractional investment on hBits Blog. Choose the best option for your goals. Read now!

PPF vs fractional investment | The pursuit of financial goal

Most Indian investors saving for long term goals like saving for the higher education of their children or building a retirement corpus are usually risk averse and seek guaranteed returns. As a result, the Public Provident Fund (PPF) has found place in the financial portfolio of most Indians, with generations of India&nbsp;

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PPF vs fractional investment- The pursuit of financial goals

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Throughout history, owning real estate has been one of the best vehicles for wealth creation. In fact, canny real estate investments have generated the most number of millionaires and billionaires in the past two centuries. These investments may take the form of ownership of land, buildings, infrastructure facilities such as railroads and ports, and other permanent structures. Investment in real estate yields two kinds of passive income – the gradual appreciation of the property value, and the periodic income from rentals and other such agreements. Moreover, such investments also offer a host of tax advantages.Real estate investments tend to be capital-intensive and long-term; they require a hefty initial outlay and are dependent on cash flows. Each property has a unique set of pros and cons and tends to be illiquid in general. Until after Independence, such investments were restricted to the uber-rich, who could absorb such inherent risks. However, since then, several new investment avenues have opened for those interested and involve the pooling of resources from multiple individuals to acquire property and sharing the returns among them. Let’s take a look at some of the best real estate investment and ownership opportunities<h4 style="margin-left:0px;">&nbsp;</h4><h4 style="margin-left:0px;">Real Estate Investment Trusts</h4><a href="https://hbits.co/article/reit-vs-fractional-ownership-what-should-you-pick-and-why">Real Estate Investment Trusts (REITs)&nbsp;</a>are ideal for those looking to invest in real estate while avoiding the high attendant costs of maintenance. They allow individuals to diversify their portfolios without holding physical assets. Similar to mutual funds, REITs invite a number of individuals to pool their money together, which is then applied to acquiring and maintaining certain properties. Investment and management decisions are taken by experienced asset managers. The returns are distributed among the investors. The investor can liquidate his position at any time by selling his units of the REIT. REITs offer transparency, and liquidity and do not charge investors unduly high fees. The first REIT in India, Embassy Office Parks REIT, got listed on 1st April 2019.<h4 style="margin-left:0px;">&nbsp;</h4><h4 style="margin-left:0px;">Real Estate Exchange Traded Funds</h4>Real estate ETFs invest in the real estate market, primarily in REITs. Again, they are a great option if diversification into real estate is the aim. ETFs have an overall low cost of ownership since they are managed passively by a trusted company. Real estate ETFs may invest in shares issued by REITs which in turn purchase commercial buildings, office spaces, hotels, and sometimes even residential condos. These funds are not yet available in India. There are several real estate ETFs in the market worldwide and an investor ought to properly research and consider all possibilities.<h4 style="margin-left:0px;">&nbsp;</h4><h4 style="margin-left:0px;">Direct ownership of Real Estate</h4>Direct ownership of real estate requires a hefty investment amount, as well as in-depth knowledge of the local real estate sector – the location, upcoming infrastructure projects, etc., all of which may potentially increase or decrease the value of the investment. Direct ownership may be categorized into ownership of commercial or residential real estate. Among the two, commercial property has been known to provide both higher and steadier returns over the same period of time. Here, returns refer to a combination of annual lease rent as well as the capital appreciation of the asset per annum. On an average, residential properties attract two to three percent returns per annum, while in the case of commercial properties up to twelve to twenty percent returns per annum are possible. In India, the prime cities to invest in commercial real estate are Pune, Chennai, Hyderabad, and Bangalore where the IT industry is predominant and constantly demanding more office spaces.<h4 style="margin-left:0px;">&nbsp;</h4><h4 style="margin-left:0px;">Fractional Ownership of&nbsp;<a href="https://hbits.co/">Commercial Real Estate</a></h4>This is an attractive option for individuals who have experience but are branching out into real estate for the first time. The first of its kind in India, this route allows for ownership of a hard asset for as low as Rs. 10 lakhs. The individual has total control over the type of properties he may wish to add to his portfolio. Location, type, and value are all valid criteria. By creating a market for a share in a property, such options allow for a seamless entry and exit into the real estate sector. The property manager takes proper care and maintenance of the asset as well as collects rentals from the tenants. The individual can make informed decisions based on real-time data generated. Also, the property's worth is evaluated frequently. Monthly rentals from the portfolio of real estate holdings are secured which ensures passive income while eliminating risks and hassles.Real estate can prove to be tricky territory for the uninitiated. But with experienced and skilled management, they can turn into an opportunity like none other. Fractional ownership of Real Estate is a fabulous option to diversify one’s portfolio, maximize income and reduce risks. Investors are encouraged to make an informed choice and venture into fractional ownership of the real estate to realize attractive yields.

hBits Blog covers various topics related to real estate ownership and investment. Real estate is a proven wealth creation tool. Read more on our blog!

What are the Best Options for Owning Real Estate?

Take a look at some of the best real estate investment and ownership opportunities that can earn maximum returns.

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So you’re looking to invest your money, but you’re no longer sure what the safest bet is going to be in a post-Covid-19 market? Well, read on, because we’ve done the research for you.The Covid-19 pandemic this past year has resulted in severe economic upheaval, shaking up the investment markets as well. As we emerge from these times of uncertainty, now is when we would most appreciate some certainty and stability in our financial returns from investment. And yet, post-lockdown, some avenues of investment, such as stocks and mutual funds have become more volatile, while other “stable” investments such as bank deposits and debt funds are yielding ever-decreasing returns due to falling interest rates.So what’s the best bet under the current circumstances? We think Commercial Real Estate (CRE) is the way to go in the current market. Fractional ownership of commercial property, in particular, is the path to the future. We’ll explain why, with the help of these 4 new-age goals for every investor across the globe post-Covid-19.<h4 style="margin-left:0px;">&nbsp;</h4><h4 style="margin-left:0px;">Regular rental income</h4>The first thing one should look for in a good investment is solid, regular returns, and commercial property — especially Grade A commercial property that hBits specializes in — provides consistent rental income, month-on-month.Straight to your pocket:&nbsp;Every month, the rent from your property will go straight to your bank account as liquid, disposable income. No need to wait for your fixed deposit to mature, or for the lock-in period on your bonds to expire before you can access the income.High rental rates:&nbsp;Premium CRE provides rental returns as high as 6%-10%. This means an investment of ₹10 lakhs could fetch you anywhere between ₹5, 000 and ₹8, 300 per month (or ₹60, 000-₹1 lakh per annum).&nbsp;Long-term tenants:&nbsp;Premium commercial property attracts high-profile tenants with deep pockets, such as MNCs (multi-national corporations), banks, retail stores, or IT offices. These tenants tend to not only pay their rent on time or in advance, but also lease the property for 3 to 5 years, and tend to extend the lease further. Residential property, on the other hand, has way lower rental returns (1.5%-3%) and is also prone to high tenant turnover (every time a tenant vacates the house, the owner incurs losses due to repairs, cost of searching for new tenants and the lost rental income while the property is vacant).<h4 style="margin-left:0px;">&nbsp;</h4><h4 style="margin-left:0px;">Long-term Capital Appreciation</h4>In addition to providing steady rental returns month after month, one of the biggest advantages of premium commercial real estate is the potential for capital appreciation, which increases the value of your original investment. Over time, as the property value continues to appreciate, the rental rates will also rise hand-in-hand.Commercial real estate has given 16% CAGR (Compound Annual Growth Rate) over the past 5 years, and 15.3% CAGR over a 10-year period. CAGR is used as a measure of the average yearly growth of investments.Let’s use this same yardstick to compare a commercial property to the stock market (considered to be a high returns investment) and gold (considered to be stable). The Sensex has a considerably lower CAGR — 13.4% over the last 5 years and 10.8% over the last 10 years. Meanwhile gold has yielded even less, at about 10.25% CAGR over the last decade. This means commercial real estate is the clear winner, as it has not only provided higher capital growth but combines the high profits of stocks with the stability and security of gold.<h4 style="margin-left:0px;">&nbsp;</h4><h4 style="margin-left:0px;">Stable Asset Class</h4>The third factor to consider before investing your hard-earned money is how stable the asset is. Real estate has always been considered among the safest assets, including gold and government bonds, and fixed deposits. Unlike real estate though, gold does not generate regular income, and the returns from bonds and deposits can be very slow and not liquid. Once again, real estate emerges as the winner, as a stable asset class with high returns. This is particularly true even during these difficult times in the Covid-19 pandemic.Pandemic-proof:&nbsp;If anything, this is a great time to invest in commercial real estate, especially if it is a pre-leased property like the kind hBits offers. Pre-leased commercial properties have witnessed minimum fallout from the pandemic since tenants are locked in for the duration of the lease. However, under-construction properties are facing a huge cash crunch and ready-to-use vacant properties have also suffered setbacks, as most companies have employed a ‘wait and watch’ attitude before pouring money into an office lease. Compare this to residential property, which has taken a huge hit in the pandemic, due to people leaving metro cities and returning to their hometowns from where they are working remotely. This has led to a decrease of 2%-7% in residential values in India this year.&nbsp;Type of property and tenant:&nbsp;Be sure to invest in pre-leased Grade A commercial property. Buying a vacant property would still mean you’d have to search for a tenant while losing out on rent in the meanwhile. And with Grade A real estate, even after the lease period expires, tenants are far more likely to extend the contract. Failing that, these properties always have a consistent demand for leasing and resale. These are the properties that have not been hit too hard by the pandemic either, as the tenants are MNCs or large corporations who have deep pockets and have continued to pay rent on time even during these uncertain times. hBits selects the most promising Grade A properties in high-demand locations such as business districts after doing all the research, and the tenants are also audited to ensure that the lease and your rental agreement will remain stable. This audit report is also shared with buyers before the purchase.Set for a price boom:&nbsp;Right now, property prices are more favorable for buyers as cash-strapped developers are looking to sell cheap to bring in liquidity. However, these affordable prices won’t last long. Due to the ensuing economic slowdown, RBI is eyeing further interest rate cuts. When interest rates fall, so do cap rates (capitalization rate is a measure of risk in real estate). This means lower risk, which makes the commercial property even more lucrative, resulting in a price boom. This will be exacerbated by rising inflation. The current economic scenario can actually be perceived as an opportunity to claim a stake in commercial real estate at discounted prices and make a handsome profit once the market picks up again.Finding a fair price:&nbsp;While the residential property is fairly simple to valuate simply by doing a little legwork and researching current market rates and local facilities, the valuation of property is more complicated with the commercial property because there are many factors to consider. To assure investors of a fair price, hBits provides certification from Jones Lang LaSalle (JLL), an independent real estate consultancy that checks the local resale prices, rental rates, and other factors before certifying that a property is being sold and rented out at a fair price.Hedge against inflation:&nbsp;hBits ensures a consistent increase in the rental yield, with contractual agreements that rental rates will increase by 15% every three years. This built-in escalation clause factors in inflation and provides steady returns over the years. So if your property fetches ₹1 lakh per year currently, in three years, this will increase to a return of ₹1.15 lakh. This sets off any inflation in the future.Continued demand:&nbsp;Commercial real estate in India witnessed gross leasing activity at 25% year-on-year in 2019. Even during the pandemic, between May and July 2020, India witnessed deals of approximately 11 million sq ft in commercial real estate and another 8 million sq ft is expected to be absorbed in the future. hBits sources premium, sought-after property that is always in demand, and will continue to fetch handsome returns even in a post-Covid world.<h4 style="margin-left:0px;">&nbsp;</h4><h4 style="margin-left:0px;">Diversified portfolio</h4>The final point investors need to keep in mind is to maintain a diversified portfolio that balances risk and return. If you have already invested in stocks or mutual funds, commercial property is a great way to bring more stability to your portfolio without compromising on returns.Diversifying the portfolio is a good idea even if one were to invest solely in commercial property. This becomes all the more convenient with hBits and its format of fractional ownership, which has reduced the entry barrier to a minimum investment of ₹10 lakhs. For example, instead of investing a lump sum of ₹30 lakhs in an asset, now you can invest ₹10 lakhs in one property and ₹20 lakhs in another, and so on. This reduces your risk even further since you are no longer putting all your eggs in one basket.<h4 style="margin-left:0px;">&nbsp;</h4><h4 style="margin-left:0px;">No-fuss investment for NRIs</h4>Tech platforms like hBits, which offer fractional investment in CRE, are particularly convenient for NRIs because it allows them to invest in their homeland without the requirement for travel. Even after the travel restrictions due to Covid-19 are lifted, it may not be possible for NRIs to visit too often for maintenance of the property, to enter a new lease agreement, or for the resale of the property. With hBits, all of this can be done on your laptop, anywhere in the world. Not only can you track the status of your property, but you can also sell it on the same platform, or look for the next property to invest in.Also consider that as compared to international cities such as Dubai where demand and rental returns have steadily been falling, the Indian office space is still in the growth stage, despite the pandemic. In Dubai, rent has dropped by as much as 10%-20% year on year, depending on location. Compared to this, major cities in India have shown positive growth of 5%-12% in commercial real estate in the last few years. As mentioned earlier, even during the peak lockdown months of May-July, deals were made for as much as 11 million sq ft of CRE in India. It’s safe to say that as long as one picks a solid, Grade A property, returns and resale value will be stable here.<h4 style="margin-left:0px;">&nbsp;</h4><h4 style="margin-left:0px;">Commercial property is the future</h4>On all four factors, commercial real estate is the undisputed champion that will bring you solid and consistent returns, while providing strong growth and stable investment. You may ask yourself then, why doesn’t everybody invest in it? The answer to that is, CRE will be the investment of the future, especially since more and more people are buying stakes in it through fractional ownership, which makes commercial property affordable for retail investors as well. This is the new-age vision that hBits has for the future of investment in India, bringing Grade A commercial real estate within the reach of the common man.

Stay ahead of the game with fractional ownership in real estate and finance post-Covid. Learn how to safeguard your investments on hBits Blog. Read now!

Covid-Resilient CRE: Secure Future with Fractional Ownership

So you’re looking to invest your money, but you’re no longer sure what the safest bet is going to be in a post-Covid-19 market? Well, read on, because we’ve done the research for you. The Covid-19 pandemic this past year…

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Commercial property has become one of the hottest investment assets for NRIs in the recent past. A rapidly developing economy, growing urbanization, the depreciation of the rupee, the establishment of RERA, which increases transparency in the realty sector, attractive rental yields, and good value appreciation potential are some of the factors that are driving this trend.With government rules now allowing NRIs to freely purchase property except farmland and plantation land, the real estate sector has witnessed considerable wealth inflow from the Indian diaspora. A report by real estate consulting firm 360 Realtors notes that NRI investments in the sector doubled from $5 billion in 2014 to $10.2 billion in 2018. Meanwhile, a consumer sentiment survey by ANAROCK for the first half of 2019 reveals a special preference for real estate among NRIs, with 63% of them opting for property over other assets.<h4 style="margin-left:0px;">&nbsp;</h4><h4 style="margin-left:0px;">Residential real estate versus&nbsp;<a href="https://hbits.co/">commercial real estate</a></h4>The residential real estate sector in India is currently undergoing a slowdown. In this scenario, commercial real estate has emerged as a winning&nbsp;<a href="https://hbits.co/">investment option for NRIs</a>, promising returns in the range of 12-20% (contractual yield + appreciation potential) annually. The high demand for premium office spaces in India is also prompting foreign investors such as Blackstone, Brookfield, and Xander to enter the commercial real estate space. A number of high-value transactions running into thousands of crores of rupees completed in the past year attest to the bullish outlook in the market.Investing in commercial real estate: The brass tacksNRIs must be extremely careful while purchasing commercial real estate in India. It is easy to lose your way in the labyrinth of paperwork associated with a property purchase in this country. There are many factors to keep in mind in this regard. Three important ones are:<ol><li>Location: Choose a location where there is a high demand for office space. Failing on this front would mean difficulty in getting good tenants and low rental yields. Location is also important in determining your interest rate from banks.</li><li>Due diligence: Ensure that all papers, permissions, and approvals are in order. It is a good idea to check the credentials of the developer, construction quality, access to transport and infrastructure, and so on.</li><li>Income and expenditure: Closely examine the cash flows, management costs, property tax, cost of insurance, lock-in period, capital appreciation, and so on.</li></ol><h4 style="margin-left:0px;">&nbsp;</h4><h4 style="margin-left:0px;">Real estate ownership made easy</h4>The hBits fractional real estate ownership platform takes care of many of these problems. With its help, you can become a partial owner of profitable&nbsp;<a href="https://hbits.co/">commercial real estate properties</a> across India at a comparatively small ticket size. What’s more, it enables you to choose the location, size, tenants, developer, and even the exact property.Above all, it saves precious time and money by relieving owners of the need to conduct research and due diligence. Our properties are listed only after careful vetting by our in-house experts. Once you have selected the property, our transaction experts will guide you through the purchase process and help you finish the paperwork. And you can do all this online without stepping out of the comfort of your home!

NRIs can build wealth through commercial real estate investing. hBits helps you find the best properties and provides the tools you need to succeed. Read more!

Commercial Realty|An Attractive Way To Build Wealth For NRIs

Commercial property has become one of the hottest investment assets for NRIs in the recent past. A rapidly developing economy, growing urbanization, the depreciation of the rupee, the establishment of RERA, which increases transparency in the realty sector, attractive rental yields, and&nbsp;

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Commercial Realty| An Attractive Way To Build Wealth For NRIs

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For an individual, arriving at a formula that maximizes returns while minimizing risks is much like locating the Holy Grail. Unfortunately, this is an equation that changes with several factors – performance of markets, industry cycles, and individual risk profiles et al, the elusive quest never really concludes. One sure way, however, of mitigating portfolio risk is through diversification.EquityEquity remains a popular investment option with individuals of all types. Since the value of equity assets largely depends on market factors outside of one’s control, it makes for a highly volatile investment route.Mutual fundsMutual fund is well suited for individuals with cash in hand, but limited knowledge of the working of share markets. A mutual fund offers security against market fluctuations by pooling money from different individuals and parking it in various equity or debt instruments. The basket of investments is carefully managed by experienced professionals in exchange for a fee. Similar to equity, the value of a mutual fund depends on market factors which makes it a volatile investment.Debt instrumentsIn India, investing in a debt instrument is considered the least risky, and is consequently the most popular option. Investing in debt instruments such as fixed deposits, National Savings Certificates (NSCs), and Public Provident Funds (PPF) protects the investment portfolio from the volatility posed by equity and mutual fund investments, and so offsets the risk. Debt instruments have two primary characteristics – a regular but fixed mode of income, and guaranteed safety of the principal invested. However, playing safe almost ensures that returns never get a leg up over taxation and inflationary pressures.A hot new option – fractional commercial real estateReal estate continues to be the one option that can turn a canny individual into a millionaire the quickest. In fact, most high-net-worth individuals across the globe have maximized their wealth by owning real estate. The fly in the ointment is that an individual must carefully vet the property under consideration. This is time-consuming, cumbersome, and could easily go wrong due to a lack of expertise and experience. Post-purchase, the asset needs to be owned and managed which is time-consuming as well. This clearly makes for a stressful proposition.A viable new alternative is to own&nbsp;<a href="https://hbits.co/properties">fractional commercial real estate</a>. Here, the money from various individuals is directly invested in a property, mostly commercial. This option allows an individual to seamlessly enter and exit the asset without the hassles of the ownership process. Hence, an individual can bypass the illiquid nature of real estate ownership. It should be considered a great long-term option and is a relatively new addition to an Indian’s portfolio allocationWhat are the benefits of managed&nbsp;<a href="https://hbits.co/">commercial real estate?</a><ul><li>Secure monthly rental payments from strong credit-rated tenants</li><li>Tenants fund the furnishing and fit-outs of premises which ensures tenant-asset stickiness</li><li>Contractual rental yield + potential appreciation of 12% to 20% due to rental escalation and market appreciation</li><li>Minimum downside risk due to hard asset ownership compared to any other asset classes</li><li>Unique investment to diversify portfolio consisting of traditional equity and debt instruments</li><li>All the expenses for owning an asset are the bare minimum and predictable</li></ul>The individual is ultimately responsible for building a well-performing and diversified portfolio so making an informed choice is crucial. Choose fractional real estate as a rock-solid option for your portfolio.

Secure your future investments! Learn how to diversify your portfolio in 2022-2023. Get expert tips and insights on mitigating risk. Check out our blog now!

How to Diversify Your Portfolio in 2022-2023?

Learn how to diversify your portfolio to earn maximum returns in 2020-2022 .&nbsp;

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With hBits, property owners grow rich in their sleep. It’s a strange assertion.There are a ton of property owners. But the million-dollar question is how to be a successful property owner?Here, we’re not merely talking about owning a piece of real estate. Our approach is rather turning to a real estate that works for you. To make it your asset—A Grade pre-leased property that secures a regular monthly income in form of rentals.Up until recent years, the arrangement around property ownership has been more or less the same across communities and cultures. One either purchased the property or arranged a rental agreement with a property owner.In traditional ways of ownership, there was often a resurfacing market risk that investors pretended to ignore.However, today the business models have evolved to a point where several unrelated investors can share the ownership of high-value property. Of course, you share the rewards with other co-owners but at the same time, you’re also mitigating the risk of ownership. This encapsulates your investment in a far lesser risk.Imagine owning a 25 percent stake in potentially high-growth investment property at a prime location without knowing the other investors.<h4 style="margin-left:0px;">&nbsp;</h4><h4 style="margin-left:0px;">This concept is termed as Fractional Ownership.</h4>This is what hBits does.hBits is a platform that enables Fractional Ownership in high-value properties, creating a new set of opportunities and implications.We’re the leading storytellers of how new investors are willing to embrace the sharing economy for mutual benefits.The most appealing side of fractional ownership is how you can hedge and distribute the risk and downside of an investment, while at the same time receiving stable benefits.<h4 style="margin-left:0px;">&nbsp;</h4><h4 style="margin-left:0px;">Could fractional ownership be the future of investments?</h4>Our guess is YES. We’re betting on the positive side of this prevalent sharing economy, which as per economic times, is going to dominate investments in the 21st century.Undoubtedly, Fractional Ownership has opened the gates of a new market in real estate. Our goal as a firm that provides an accessible platform for investors to co-own the Grade A commercial assets, is to simplify the process of buying, renting, and reselling the properties.We have devised an efficient online and offline system that works for all, investors, negotiators, and sellers.Let’s see how hBits simplifies fractional ownership for investors.We do our homework.In India, there is a total stock of more than 500 million square feet of Grade A assets. These assets are located in Information Technology parks and commercial buildings.Top-quality developers construct these properties and Grade A tenants occupy these spaces. This mix of top developers and tenants is what makes these properties high-yielding investments, with stable rental and appreciation.Here are five attributes of hBits workflow that ensure a profitable investment:<h4 style="margin-left:0px;">&nbsp;</h4><ol><li>Secure Cashflow:</li></ol>The key to any successful investment is ensuring a stable cash flow throughout the term of ownership. We ensure this by managing four factors.<ul><li>Quality Tenants: The benefit of owning a high-value property is that you get reliable long-term tenants. These consist of companies with strong credit ratings. We cross-check the background of tenants and their paying capacity before enrolling them in the process.</li><li>Lock-in: Lock-in guarantees that a tenant doesn’t leave mid-way. This is secured by leave and license agreements which range from three to five years of lock-in period time</li><li>Fill-out costs: The more the investment a tenant does on a property, the more certain it is that it will stick to it. As a secondary rule, the furnishing and fit-outs in the lent-out properties are funded by the tenants, ensuring their loyalty</li><li>Security Deposits: Even during a sudden unforeseen crisis, if the tenant is compelled to leave the property, we check their exit through a security deposit of at least six months. This grants us a sufficient transition period to lease out the property to another tenant.</li></ul><h4 style="margin-left:0px;">&nbsp;</h4><ol><li>Appreciation Potential:</li></ol>The sign of a good real estate investment is that its value should increase with time. This is why we check the property price appreciation potential before investing in them. This broadly touches two areas:<ul><li>Rental Escalation: We ensure that contractually our rental rates increase by 15% every three years. This contractual agreement between tenants and owners guarantees a steady boost in rentals.</li><li>Market Appreciation: The positive return on the investment is what decides the value of the property in the future. This is why we do a proper selection of micro-market through a diligent analysis of supply-demand dynamics, ensuring a steady increase in the value of property over time.</li></ul><h4 style="margin-left:0px;">&nbsp;</h4><ol><li>Hard Asset Ownership:</li></ol>The nature of real estate is that it’s a tangible asset of a resource with a fundamental value. This is what makes it a hard asset, with a minimal downside. It naturally secures you from the upheavals of the market.<h4 style="margin-left:0px;">&nbsp;</h4><ol><li>Asset Diversification:</li></ol>Asset diversification is an investment strategy. It’s based on the premise that a portfolio of multiple asset types will perform better than individual assets.We ensure a healthy asset diversification by customizing your portfolio based on traditional equity and debt instruments. And if you don’t like where you are, we can move. We are not a tree.<h4 style="margin-left:0px;">&nbsp;</h4><ol><li>Minimum Costs:</li></ol>Our objective is to give maximum returns for minimum investments. We achieve this by being transparent in our proceedings and agreements. We don’t entertain any hidden or subsequent expenses while investing in pre-released assets.Apart from that, we ensure that the Common Area Maintenance (CAM) and Property Tax are underwritten in the purchase price of the asset, resulting in minimum costs for investors.The major fortunes in the world have been made through investments in properties. The wisdom from the west says that we’re not supposed to hold ourselves from buying real estate. Rather we should buy and then hold to the real estate.For most of us, the problem is not the will to invest in a profitable property. Rather it’s the hassle of buying, renting, and selling properties. For us, a problem is an opportunity.At hBits, we have simplified Fractional Ownership into a simple four-step process.<h4 style="margin-left:0px;">&nbsp;</h4><h4 style="margin-left:0px;">Step 1 – Choose Property</h4>At first, we understand your objective behind the investment and then provide you with a portfolio of carefully examined properties. You can pick an investment that meets your criteria.<h4 style="margin-left:0px;">&nbsp;</h4><h4 style="margin-left:0px;">Step 2 –LOI &amp; Due Diligence</h4>We walk, so you can rest. We analyze the properties with extreme diligence before featuring them on our platform. We check its current value, its future appreciation rate, and the potential risks.<h4 style="margin-left:0px;">&nbsp;</h4><h4 style="margin-left:0px;">Step 3 – Earn</h4>Property management is by far the most tasking step in real estate investment. That is why we manage your rental collections, property maintenance, and re-leasing proceedings. We also provide an online all-time accessible dashboard that provides insights on your property’s performance with all the upcoming events related to your portfolio.<h4 style="margin-left:0px;">&nbsp;</h4><h4 style="margin-left:0px;">Step 4 – Sell</h4>We help you re-lease your property in case of contract expiration or simply if you wish to sell your holdings. Our online hBits platform can also help you sell it to another community member.This new age of shared economy brings in a sustainable solution in a market that is still struggling through a pandemic.It’s beneficial for property owners to build quality properties.It’s beneficial for negotiators who choose to sell and earn through transparent and manageable online platforms.And it’s beneficial for investors who want to earn stable rentals without burdening themselves with the un-proportionate risk that comes with solely owning the property.<h4 style="margin-left:0px;">&nbsp;</h4><h4 style="margin-left:0px;">Everybody wins. And that’s what hBits truly stands for. An overall win for everyone involved.</h4>Here are four benefits of investing in Fractional ownership with hBits:<h4 style="margin-left:0px;">&nbsp;</h4><h4 style="margin-left:0px;">Low Ticket Size:</h4>Our low ticket size makes high-quality assets affordable to middle-class investors. Starting at just 10 lakhs, it gives you access to invest in an asset class that has historically been confined to multi-millionaires.<h4 style="margin-left:0px;">&nbsp;</h4><h4 style="margin-left:0px;">Smooth Discovery:</h4>Our online platform is a comprehensive tool to access information and insights on profitable Grade A properties. Its online nature ensures that you can access it from any location and any device.<h4 style="margin-left:0px;">&nbsp;</h4><h4 style="margin-left:0px;">Hassle-Free Ownership:</h4>Our team of experienced managers provides service around turnkey management, rent collection, and property maintenance. We do all the leg work so you can have hassle-free ownership.<h4 style="margin-left:0px;">&nbsp;</h4><h4 style="margin-left:0px;">Improved Liquidity:</h4>Our online platform connects you with the new users in our community. This enables you to sell and buy within the platform, resulting in seamless exits and continuous competition for a better price.This is our entire story. This is why and how you can invest in Fractional Ownership with hBits to earn millions without investing millions.As a leading Fractional Ownership firm, we solve difficult problems around investments. This is not just limited to simplifying the process but also successfully managing the risk of investment and answering difficult questions.In case you have a question for us, kindly&nbsp; <a href="https://hbits.co/contactus">Contact us. We’ll get back to you at our earliest.&nbsp;</a>

Uncover the complete guide to commercial property valuation. Explore methods, techniques, and stay informed with the latest industry news. Read on!

Invest Smarter, Unlock Returns of Millions with hBits

With hBits, property-owners grow rich in their sleep. It’s a strange assertion. However, the stranger is the term itself, property-owners. A mix of two mouthful words, ‘property’ and ‘Owners,’ with a tint of feudal nobility, referring to a sophisticated breed…

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“Stay home, stay safe” shouldn’t mean that all real estate investing must necessarily come to a standstill. At a time when staying indoors has become the mantra to protect the population from the threat of Covid-19, online property purchase has emerged as the key to sustained ownership of the commercial real estate in the midst of the lockdown. The need for venturing outside is completely eliminated with technology-enabled online dealing as everything you need to make the right decision is literally at your fingertips.<h4 style="margin-left:0px;">&nbsp;</h4><h4 style="margin-left:0px;">Online Asset Trading</h4>From stocks and bonds to gold and real estate, all asset types can be traded online nowadays. Equities have been bought and sold online for many years, while investors can also trade in government securities through dedicated online apps like NSE goBID. And gone are the days when buyers had to visit a jeweller or a bank to purchase the yellow metal; technology has now made it possible to invest in ‘digital gold’ of guaranteed purity through common digital platforms such as Paytm and PhonePe.Although the physical nature of real estate to online purchase is just a matter of awareness, 100% online purchase are now possible in the commercial real estate space with the aid of specialized and secure platforms. Companies operating these platforms perform all the research and due diligence for you so that you can invest safely from the comfort of your home.<h4 style="margin-left:0px;">&nbsp;</h4><h4 style="margin-left:0px;">Online Property Purchase</h4>Property purchase has traditionally required significant physical effort. Activities such as scouting for a location, checking out the construction quality, assessing design and layout, inspecting the surrounding areas, and verifying documentation, demand considerable time and energy from the buyer. Issues like maintenance and rent collection require the owner to stay in close proximity to the building even after the purchase. But online trading in real estate is gradually reshaping the industry by removing the need for physical proximity and empowering you to take important decisions based on information on your screen.<h4 style="margin-left:0px;">&nbsp;</h4><h4 style="margin-left:0px;">Residential Real Estate</h4>Even till a few years ago, purchasing residential real estate meant devoting several days to physically inspecting sundry locations. The advent of the first major online property sites in the mid-2000s made property selection simpler through an online listing of inventory. Each listing was accompanied by important details such as pricing, amenities, pictures, and floor plans to make the process as simple as possible for the home buyer. In a recent article by CNBC TV18 “This real estate company sold 500 homes amid coronavirus crisis;” the author has discussed the usefulness of online property buying and how such a medium can be used to reach potential purchasers even in less-than-ideal scenariosMany other features have been added to property portals since then including online mapping, virtual 3D tours, video tours, price heat maps, etc. Although end-to-end online transaction is yet to become viable in the residential property sector, online portals have had a game-changing impact on the industry by influencing the way customers search for property.<h4 style="margin-left:0px;">&nbsp;</h4><h4 style="margin-left:0px;">Commercial Real Estate</h4>Unlike residential realty, the more formalized nature of the commercial real estate sector in India is well suited to end-to-end online purchase of inventory through the fractional ownership model. This innovative model is chiefly designed to help in the broad-basing of commercial real estate ownership which comes with massive price tags that put them out of the reach of common people. By allowing investors to own a piece of premium Grade A commercial property at a relatively small ticket size, fragmented ownership platforms have opened up the commercial real estate space to ordinary investors by providing high-quality options at affordable prices.<a href="https://hbits.co/">Fractional ownership platforms</a>&nbsp;not only list various properties on their website but also perform due diligence vis-à-vis each listing. They specialize in vetting properties and conducting due diligence with the help of their own staff. They even manage the property for you and help find lessees when a vacancy arises. The entire process is completely online enabling investors to buy property anywhere in the country without the need to venture out. Here’s how it works:<ul><li>Property Selection: The portals display a wide array of options complete with details regarding size, pricing, rental yields, appreciation value, etc. The asset value is completely transparent with a detailed break-up of the pricing structure. You can also find information about the location, tenant (in the case of pre-leased properties), images, video walkthroughs, LEED certifications, amenities, name of the developer, and so on. Practically every detail that is relevant to the selection process from the point of view of the investor can be found on your computer screen.</li><li>Due Diligence &amp; Purchase: There’s no need to worry about due diligence as all the properties which are listed are carefully vetted by the company. From bank loan documents to land use permissions, everything is carefully scrutinized by professionals. Once you express your intent, the firm will appoint transaction specialists to guide you through the process and answer all your queries.</li><li>Maintenance &amp; Earning: The services do not stop with the purchase. The company employs staff for the upkeep and maintenance of each property leaving you relaxed and stress-free. They also perform rent collection and assist in finding a tenant every time a property falls vacant.</li><li>Selling: Investors can resell the property at any time by simply indicating the same to the company. The company’s transaction specialists will help you re-list the property on the portal and guide you through the redemption process.</li></ul>The transaction process is totally safe with trained specialists handling every aspect of the deal. Due diligence is given utmost importance. Investors too can cross-check key documents using the relevant online forums. Most key documents such as occupancy certificates and building plan approvals are readily available on the websites of the respective municipal authorities.A tenant profile is an excellent yardstick to validate the quality of a shortlisted property. Reputable Indian and multinational companies with large balance sheets and global footprints follow well-established norms and procedures for due diligence when it comes to leasing commercial property. Their presence can be reassuring of the intrinsic value of your investment and is one of the best parameters to guide you vis-à-vis your investment.<h4 style="margin-left:0px;">&nbsp;</h4><h4 style="margin-left:0px;">Reliability is the Key</h4>Online property investment is not only simple and hassle-free but also highly secure. Although each offering is pre-vetted by the company prior to listing, investors can also carry out independent online checks to satisfy themselves about the value of their investment. At the same time, the onus is on the customer to select a reliable platform. Reliable real estate purchasing service providers can help you get the best deals in a totally secure and transparent environment from the safety and protection of your home.

Secure digital property buying made simple! hBits offers quick and easy access to top digital properties. Visit our website now.

Secure, Easy Digital Property Buying, Like Online Shopping

Online property purchase has emerged as the key to sustained ownership of commercial real estate

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By the year 2050, 25% of the population in countries of OECD and nearly 20% of the global population would be over 65 years. However, there is enough empirical evidence to show that barely a quarter of the population globally invests with retirement as a goal. India, which is expected to have 315 million people by the year 2050, is no exception to this rule.<h4 style="margin-left:0px;">&nbsp;</h4><h4 style="margin-left:0px;">Is NPS the best choice?</h4>As reported by the Financial Express in the recent past,&nbsp;<a href="https://www.financialexpress.com/economy/indians-not-saving-enough-for-retirement-shows-survey/2110248/">a survey done by PGIM India Mutual Fund and Neilsen</a>&nbsp;in late 2020 shows that 51% of the survey participants had no retirement plan at all. Among the others, who had some retirement plan, the National Pension System (NPS) was a popular choice as it is a low-cost tool, is reasonably tax efficient, and has various debt and equity options that an investor can choose from based on his risk appetite. At all times, however, 25% of the corpus remains invested in debt to ensure capital security.Despite its obvious advantages, NPS has some limitations that do not make it best suited for retirement planning. One of the most glaring limitations is the long lock-in period of 25 years. Only partial withdrawal up to merely 25% is allowed, that too on specific grounds such as higher education or a wedding of children, treatment of COVID, and serious health grounds.Further, an investor must make contributions up to a minimum of 10 years to qualify for a partial withdrawal and cannot consider another withdrawal before 5 years.Another drawback of the NPS is the lack of flexibility in reinvestment options post-maturity. At the age of 60, it is mandatory for an NPS investor to put 40% of his corpus into a low-yield option (3-7% pre-tax). If he chooses to exit before retirement age, he must use 80% of the corpus to buy an annuity. The income from the annuity too is taxable in the hands of the investor at the time of receipt.While NPS may be popular owing to its affordability, for middle-income investors looking at a tax-efficient and flexible means to build a retirement corpus the NPS may not be the best option to consider. Investment avenues such as fractional ownership are better suited to retirement planning as it provides better returns and flexibility.<h4 style="margin-left:0px;">&nbsp;</h4><h4 style="margin-left:0px;">Why fractional ownership?</h4>Fractional ownership is a relatively new concept in India that has of late been making waves in investment circles. In India, there is a high degree of emotional value attached to real estate and owning one’s own property is considered an important milestone. However, it is a little-known fact that commercial real estate is a viable and lucrative investment option for retail investors.But how do retail investors for whom, commercial real estate has been inaccessible so far owing to ambiguity get access to this largely unexplored investment avenue. Enter proptech start-ups such as hBits. As covered in YourStory,&nbsp;<a href="https://yourstory.com/2021/03/hbits-proptech-startup-real-estate-fractional-ownership/amp">hBits combines real estate, technology, and finance</a>&nbsp;to create a platform that is ideal for middle-income investors to invest with a low ticket size of Rs 25 lakhs in numerous Grade A commercial properties with a pre-stipulated exit strategy.As explained in Financial Express while fractional ownership in real estate is not regarded as a traditional option retirement planning&nbsp;<a href="https://www.financialexpress.com/money/nps-vs-fractional-property-where-should-you-invest-for-retirement/2272963/">scores over NPS on both returns and flexibility</a>.<h4 style="margin-left:0px;">&nbsp;</h4><h4 style="margin-left:0px;">Superior returns as compared to NPS</h4>The NPS has gained popularity for delivering&nbsp;<a href="https://www.paisabazaar.com/saving-schemes/nps-returns/">good returns</a>&nbsp;in the 9-12% range. The average rental yields on commercial real estate property are about 9%. Add to that the annual capital appreciation factor of 7-16% annually and it far outweighs NPS returns. It is also notable in this context, that despite a pandemic-related slowdown, and the rise of remote working, grade A commercial real estate office assets have remained a frontrunner in Q1 FY2021, accounting for more than 58% of the real estate investments.Further reiterating the prospects of commercial real estate, rating agency ICRA notes that the office leasing segment witnessed the least impact on operational cash flows during FY2021. With collections from existing leases largely intact, and the need for larger spaces increasing in post-COVID environments, commercial real estate is on firm grounds.<h4 style="margin-left:0px;">&nbsp;</h4><h4 style="margin-left:0px;">Liquid and stable</h4>As mentioned earlier, the lock-in period in NPS is 25 years making it a highly illiquid investment avenue. In comparison, fractional ownership in commercial real estate is liquid and more flexible in this regard as there is neither any withdrawal limit nor any lock-in period with regard to fractional ownership. With high-quality property and verified tenants, carefully structured contracts, and long lease periods, fractional ownership paths the way for superior and stable returns over a period of time that aids the construction of a retirement portfolio.Thus, for middle-income investors looking to build a retirement portfolio, fractional ownership in commercial real estate may prove to be a far more efficient way to ensure that the silver years are comfortable and stress-free with regard to finances.

Maximize retirement savings through fractional ownership with hBits. Learn how to grow your wealth and secure your future. Start exploring now!

Retirement Corpus Growth: Fractional Ownership vs NPS

By the year 2050, 25% of the population in countries of OECD and nearly 20% of the global population would be over 65 years. However, there is enough empirical evidence to show that barely a quarter of the population globally or invest with retirement as a goal. India, which is expected to have 315&nbsp;

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Every person who invests in well-selected real estate in a growing section of a prosperous community adopts the surest and safest method of becoming independent, for real estate is the basis of wealth. – Theodore RooseveltRent from real estate is a tried and tested way to generate passive income for investors. It helps add to wealth while simultaneously creating a safety net to hedge against income uncertainties. Along with stocks, bonds, and gold, real estate is a popular asset class known to generate stable, long-term returns. It also functions as a source of dual income (through monthly rent and capital appreciation) and is relatively immune to inflationary pressures making it one of the major means of wealth creation for societies over the ages.In India, real estate has traditionally been a prime investment vehicle owing to a strong preference for tangible assets. Up until now, most of this investment has been channelled into residential real estate. But the boom in the commercial realty sector which is currently underway, coupled with a slowdown in the housing market, present real estate investors with a unique opportunity to explore the former avenue.&nbsp;<h4 style="margin-left:0px;">Why opt for&nbsp;<a href="https://hbits.co/">commercial real estate?</a></h4>The driving motive of any investment is the maximization of returns. Currently, the commercial realty sector is providing much higher returns than the housing sector which has been struggling for the past six years. When it comes to real estate, a key figure to consider is ‘rental yields’ which expresses the annual income from your asset as a percentage of its total value to indicate your ROI. In the current scenario, the rental yield from commercial properties is anywhere in the 8-10% range while the same for the housing sector is 3-4%. This proves it is much more profitable to invest in commercial property compared to residential real estate in the present economic climate.<h4 style="margin-left:0px;">&nbsp;</h4><h4 style="margin-left:0px;">How to maximize your rental yields</h4>Once you are committed to investing in commercial real estate, the next step is to look out for a suitable property. Scouting for the property is arguably the most crucial step in the entire process since the fate of your investment hinges on this singular factor. A good property in a great location is the best bet to help you maximize your ROI. Below we look at seven key factors to help you select a good&nbsp;<a href="https://hbits.co/properties">property with the best rental yield.</a>&nbsp;<ul style="list-style-type:disc;"><li>Location: Location is the single most important factor that determines your ROI including factors like rental yield and asset appreciation. You should ideally choose a place that has high visibility, good infrastructure including roads and public transport, is located close to a commercial hub, can ensure steady footfalls, and so on. The objective is to find a place that is commercially viable. Seek out a locality where vacancy rates are below 5% as high turnovers often lead to a moderation in rental income.</li><li>Property size: Large properties tend to be safe investments, attract better-quality tenants, and lead to higher rental yields. This is especially true of premium Grade A properties which provide investors with an excellent option to diversify their portfolio. The main drawback relates to their high cost of purchase. But the fragmented ownership model has been able to solve this problem by enabling the purchase of a small piece of a much larger property at a relatively low ticket size.</li><li>Quality of the building: Good quality buildings have an edge over their competitors as it is easier to find tenants. They also command higher rents and attract quality occupants. Real estate services company CBRE defines Grade A properties as those whose development includes “an open plan office with large size floor plates, adequate ceiling height, 24×7 power back-up, supply of telephone lines, infrastructure for access to the internet, central air-conditioning, spacious and well-decorated lobbies, circulation areas, good lift services, sufficient parking facilities” and “centralized building management and security systems.” These properties generate more rental income, display greater capital appreciation, and are easier to liquidate in the market.</li><li>Regulatory requirements: Be certain to check whether all the paperwork is in place. Commercial buildings in India must comply with a large number of rules and regulations including zoning rules, fire and safety requirements, and so on. Remember also to ensure that all the legal formalities are properly completed. You don’t want to be stuck with a bad investment because you did not do your due diligence.</li><li>Quality of tenants: Be selective about your tenants. If you are investing in a pre-leased property, opt for a unit that has been taken up by a tenant with positive cash flow or a strong balance sheet and a reputation for paying their dues on time. Remember to take a good look at the lease agreement to understand factors like lease duration, termination process, frequency of rent escalation, lock-in period, etc. These are things that will directly impact your rental yield.</li><li>Growth prospects: Are rents in the area likely to rise or are they already at saturation level? What are the new offices, commercial hubs, and infrastructure projects coming up nearby that will value-add to the location your property is situated? These are some of the questions to consider while finalizing your choice of commercial real estate.</li><li>Understanding the property market: Finally, try and get a grasp of the property market both at the macro and micro levels. Many different things influence the realty market in a city including economic growth, business sentiment, pace of commercial activity, government policies, access to skilled labour, condition of infrastructure, building byelaws, etc. Choose your property after considering all these different factors to determine the best option.</li></ul><h4 style="margin-left:0px;">&nbsp;</h4><h4 style="margin-left:0px;">Lowering the entry barrier</h4>Despite the lure of investing in commercial real estate, most people have been unable to participate in the sector due to an extremely high barrier of entry. But the good news is that recent innovations in the field of finance and technology have put purchasing commercial property within the easy grasp of common investors. Two of the major developments in this regard are the launch of Real Estate Investment Trusts (REITs) and fragmented ownership platforms both of which allow you to benefit from the commercial property boom albeit through different models. The net result is that many more people can enjoy the fruits of the growth of this rapidly expanding sector.

Unlock passive income with commercial real estate. hBits shows you how to maximize rental yields. Get started now and reap the rewards.

Commercial Real Estate: Maximizing Rental Yields

Rent from real estate is a tried and tested way to generate passive income for investors. It helps add to wealth while simultaneously creating a safety net to hedge against income uncertainties.

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You have no doubt heard the idiom, ‘don’t put all your eggs in one basket’. When it comes to investment, this is THE golden rule. The smartest investors ensure portfolio diversification of their investment, which simply means spreading your capital across different forms of investments and financial assets. If you don’t diversify your investments, two things can end up happening — (A) you end up investing only in assets like bank deposits, which will keep your money safe and stable, but give very low and slow returns. (B) You invest too heavily in volatile instruments such as stocks in the hope of making quick money but expose yourself to the risk of losing your capital as well.<h4 style="margin-left:0px;">&nbsp;</h4><h4 style="margin-left:0px;">Stability And Returns</h4>What if you could add an asset that is not only low-risk but also yields high returns? It may sound too good to be true, but that’s exactly what hBits is offering to do for your portfolio through fractional ownership of a pre-leased commercial property: lend balance and stability, along with handsome profits. Try and imagine your investment portfolio as a see-saw (refer diagram below).On one side, you’ve invested in, let’s say, the stock market, an infamously volatile domain of investment. This has the potential for high returns, sure, but carries the immense risk of losing your money as well. Any major disaster, political turmoil, or even a pandemic — like the one we’re going through right now — can result in a fall in the market. Indian equity markets fell to their lowest in three years after the Covid-19 outbreak began in India. News outlets have reported that on a price-book value basis, valuations hit an 18-year low during this pandemic, touching the same levels as they had during the 2008 global financial crisis. The Nifty, which yielded a one-year return of 15% last year, has now dropped to just 5% this year. So if one invested ₹10 lakhs in Nifty last year, hoping to make 15% returns or ₹1.5 lakhs each year, during the pandemic those returns dropped to about ₹50,000 for the year. There are others who were far more unlucky and ended up losing chunks of their capital as well, with some share values plummeting.On another side, you have fixed-income assets such as fixed deposits, government bonds, insurance plans, etc. These provide the stability of steady income, no matter the condition of the market, but thanks to the risk-reward trade-off, the returns are on the lower end. Fixed deposits are currently offering paltry interest rates between 4% and 6%. So a ₹10 lakh FD would yield downwards of ₹60,000. Even with all the stability, these bank deposits are said to offer, they are not immune to the effects of this pandemic either — interest rates continue to fall at Indian banks this year, which means returns will dry up as well.In our investment portfolio see-saw, investing too much on the safer right-hand side will result in stability, but will also suppress income. On the other hand, investing too heavily in the riskier left-hand side could topple the see-saw altogether. But now, let’s take a look at the middle section that is balancing both sides — fractional ownership of a pre-leased commercial asset. This is the unicorn asset that offers both high returns and low risk.<h4 style="margin-left:0px;">&nbsp;</h4><h4 style="margin-left:0px;">A step above regular commercial property</h4>hBits offers only the most premium Grade A commercial properties that are pre-leased.Why are these two points highlighted? Because they are what ensures the win-win combination of high returns and low risk.The reason hBits picks up only the best Grade A property is because they fetch the highest rental returns, clocking in about 6%-12% per annum. At these rates, an investment of ₹10 lakhs could fetch you anywhere between ₹60,000 - ₹1.2 lakhs per annum. These properties are usually rented by MNCs, banks, IT offices, and other entities with deep pockets, who can afford to pay premium rent for the premium space.Now that we’ve explained how returns are high, let’s look at the low-risk factor. Commercial real estate has always been a high-return investment but was traditionally thought of as a high-risk area as well, for two reasons: the big ticket or huge capital required, and the risk of losing a huge amount of income in case of a vacancy.hBits has addressed the first point through fractional ownership; for the first time, anybody can choose to invest in Grade A commercial property with even ₹10 lakhs in hand. How hBits makes this happen is by bringing together several investors, and helping them pool their smaller investments to then buy multi-crore office properties in premium business districts. This way, you can be a co-owner of a multi-crore property without shelling out crores of Rupees. By sharing ownership with others, one also ends up dividing any risk from the asset. At the same time, the rental returns, while shared among many, still make quite a good profit for the investor.As for the second risk factor, again, hBits only offers pre-leased assets, which means that buyers don’t have to waste time and money looking for a tenant while losing out on precious rental income. There is added stability from the fact that premium commercial real estate is usually leased out with a lock-in period ranging from three years to five or even ten years. The tenants, which are usually large corporations, usually do not change their address frequently, and so, are likely to extend the lease further. This means that investors who bought properties through hBits have continued to enjoy high rental returns even through this pandemic, earning more than they would through bank deposits and even the stock market.<h4 style="margin-left:0px;">&nbsp;</h4><h4 style="margin-left:0px;">How can this improve diversification?</h4>Unaffected by bear markets:&nbsp;Property returns have a very low correlation with other assets and financial markets such as stocks, so a crash in the stock market would not affect your rental return.Maintain high yield: By using commercial property as the stabilizing, fixed-income portion of your portfolio, you can reduce the risk without reducing your income, which is not possible with low-yield instruments like FDs.Tangible asset:&nbsp;One of the best things about investing in property is that it is a tangible asset, which means it’s easier to relate to and understand than, say, stocks. It also gives investors a sense of security and control over their asset, since they can touch it, feel it, and can access it readily, which is quite different from a paper asset like an FD.Capital appreciation:&nbsp;Another winning point about commercial real estate is its potential for growth in value. To some extent, this is in the investor's control as well, since they can increase value directly by improving amenities. Added to that, is the assurance of steady capital appreciation thanks to the premium location and build selected by experts at hBits.Hedge against inflation:&nbsp;hBits ensures a clause in the rental agreement that will escalate rental income by 15% every three years. This protects your income by setting off future inflation. In this manner, rental income increases with inflation, as opposed to falling interest rates in bank deposits and bonds.Monthly income, credited immediately:&nbsp;Unlike many other forms of investment, where one is required to cash out before accessing their returns, your rent will be credited straight to your bank account month after month by hBits.Keep the see-saw stableAs hBits’ Director of Business Development and Investments, Mr. Ankush Ahuja, says, “Fractional ownership of commercial property is a game-changer and unlike any other financial investment. It’s more affordable than regular commercial real estate, safer than the stock market, and more profitable than bank deposits and bonds. In fact, it’s easier to understand and manage too, if you invest through a platform such as hBits, which does all the work and research and maintenance for you, while you can sit back and enjoy the profits.”Make this the fulcrum, or center of your investment portfolio to offset risks from more volatile assets, while simultaneously maintaining a high overall yield.

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Portfolio Diversification | How to invest like an expert?

You have no doubt heard the idiom, ‘don’t put all your eggs in one basket’. When it comes to investment, this is THE golden rule. The smartest investors ensure portfolio diversification of their investment , which simply means spreading your…

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Can you earn stable and long-term returns on your investment without big risks? For a long time, financial experts would have said that such an investment does not exist. Conventional wisdom used to be that there is always a trade-off between risk and returns — the riskier the investment, the bigger the returns it will yield, and vice versa.But in recent years, a dark horse has emerged that defies this trade-off and offers a win-win solution to investors — high returns with low risk. This dark horse is none other than commercial property, an investment that was once thought of as too expensive for the common man but is now quite affordable, thanks to fractional ownership.<h4 style="margin-left:0px;">&nbsp;</h4><h4 style="margin-left:0px;">How profitable is it?</h4>For any investor, the most important consideration is the return on investment, be it rent on property or interest on a deposit. Commercial property offers a generous rental yield of 6%-10% on the investment. Rental yield is calculated on this formula: Based on this formula, an investment of ₹25 lakhs in a good, Grade A commercial property could yield approximately ₹13,000 and ₹21,000 per month (between ₹1.5 lakhs and ₹2.5 lakhs per annum). Not only is this rental yield high, but it is also consistent, month-on-month because premium CRE is usually leased to MNCs, banks, retail stores, etc.Compare this to investing in a fixed deposit, while this is considered to be among the most secure places to park your money, the interest rate is a paltry 4%-6%. So, the same investment amount could fetch you as little as ₹8, 500 per month. To top that off, interest rates continue to fall at Indian banks this year, so returns will keep shrinking in the near future.Even if one were to invest the same amount in residential real estate, returns would be less than half, with the residential rental yield as low as 1.5%-3.5%. This would fetch a mere ₹3,000-₹7,300 per month.In addition, Grade A commercial property has huge potential for capital appreciation, which results in the value of your investment increasing as well.<h4 style="margin-left:0px;">&nbsp;</h4><h4 style="margin-left:0px;">Isn’t commercial property expensive?</h4>This is where hBits comes in, with the unique solution of fractional ownership. Imagine a scenario where a premium commercial building is available for sale at ₹100 crores. While the rent and capital appreciations are bound to be healthy, the investment amount is far too great for the common man, also known as a retail investor or small ticket investors... This is why the commercial property was restricted to High Net Worth Individuals (HNWI) in the past. However, on the hBits online platform, several interested investors can find each other and pool their funds for a shared investment. Say ten people invest ₹10 lakhs each, they can comfortably buy the property. Sure, the returns will be shared among all 10, but so will the risk.<h4 style="margin-left:0px;">&nbsp;</h4><h4 style="margin-left:0px;">How can I ensure stability?</h4>It’s now clear that commercial real estate is a highly profitable place to park your funds, but what really makes this a win-win investment is the stability and security it offers at the same time.Here’s how:<ul><li>Due diligence: One of the most important aspects to consider before investing in CRE is to research the property, its location, whether all the legal documents and permits are in place, as well as zonal laws and taxation laws. And here’s the main advantage of reputable real estate platforms like hBits — all the due diligence is already done, and only the best properties are offered to investors, with all the data about the property presented upfront.</li><li>Virtual tour of the property: Thanks to the tech-forward approach of hBits, investors can even do a virtual walk-through of the property before investing and ensure that it is well-built with all This means investors don’t need to be in the same city, or even the country in order to invest safely.</li><li>On-time, consistent rent: Unlike residential real estate, where tenants can default on payments or frequently vacate the property, premium CRE is leased to big-time tenants such as MNCs, banks, retail stores, etc. These tenants usually make their payments on time with a long lock-in period of five to ten years or longer.</li><li>An increasing rate of returns: hBits ensures a consistent increase in the rental yield, with contractual agreements that rental rates will increase by 15% every three years. So, if your investment of ₹25 lakhs are earning rent of ₹2.5 lakhs per year, in three years, this will increase to nearly ₹3 lakhs.</li><li>Secure, easy transactions: New-age real estate companies like hBit have the added advantage of strong technology, which ensures that your transactions will be secure and that all aspects of the investment are transparent and easy to track on the online platform, at the click of a</li><li>Easy exit: Real estate is generally not considered to be a liquid investment, but hBits facilitates greater liquidity by allowing investors to sell their investment to another buyer on the same</li><li>Diversified investments: Since hBits offers fractional ownership of commercial real estate, investors no longer need to pool all their funds in one expensive property, but can spread it across more investments, thereby reducing their risk even further.</li></ul><h4 style="margin-left:0px;">&nbsp;</h4><h4 style="margin-left:0px;">What about other investments?</h4>While there are quite a few financial assets or ventures that offer high returns, they are also usually accompanied by high risk, as we see in the stock market or even in mutual funds. Let’s take a look at a couple of the most common ones:<ul><li>Stock market: It is well known that the stock market is extremely volatile because the equity market is not just driven by corporate earnings but also by market sentiment, which is not predictable. This is why, according to an article in the Economic Times, only 5% of investors make money in the stock market. Think about that number — just 5% are successful in the Indian stock market. Not to mention, Indian equity markets fell to their lowest in three years after the Covid-19 outbreak began in India. This time last year, the one-year return of Nifty was 15%, which has now dropped to merely 5%. So, while a one-year investment of ₹10 lakhs would have fetched rent worth ₹1 lakh, the same investment in Nifty could have earned half — ₹50, 000.</li><li>Mutual funds: Balanced mutual funds are considered to be among the safest formats for first-time investors as they combine the thrill and high returns of the equity market along with the safety net of the debt market. However, balanced funds have also shown falling returns over the last few years due to two reasons: an increased focus on riskier equity, along with a sluggish debt market plagued by liquidity issues and falling interest rates. High inflation has further squeezed the market, which means some funds are giving negative returns in real terms (which compares actual returns with inflation.) Take for example the average returns of low-duration, short-duration, corporate bond and banking, and PSU debt funds over the past six months, which was between 5.18% and 6.19%. This would mean that over a period of six months, a ₹10 lakh investment in Grade A property could yield as much as ₹50,000. The same investment over the same period of time in a balanced mutual fund would have yielded about ₹30, 000.</li></ul><h4 style="margin-left:0px;">&nbsp;</h4><h4 style="margin-left:0px;">The unicorn investment</h4>As we have seen, the combination of high returns and low risk is unique to commercial real estate, and that is what makes it a&nbsp;<a href="https://hbits.co/contactus">unicorn investment</a>. By keeping the minimum investment at a reasonable ₹10 lakhs, hBits has opened the world of fractional ownership for the common man in India, making it the new-age synonym of Real Estate and Financial Service industry.

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Low Risk Investing: Stable Returns for Long-Term Success

Can you earn stable and long term returns on your investment without big risks? For a long time, financial experts would have said that such an investment does not exist.

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Pandemics cause serious disruptions in the economy but offer unique opportunities for prudent investors. Some core sector stocks might be wise investments right now. Similarly, buying commercial property for investment could be an attractive opportunity in current times with the potential of stable returns and the capacity to provide dual income through rent and capital appreciation.<h4 style="margin-left:0px;">&nbsp;</h4><h4 style="margin-left:0px;">State of the Economy</h4>With the Covid-19 crisis bringing all economic activity to a standstill, the world economy is suffering badly. Governments worldwide have announced bailout packages targeted at specific sectors to keep their economies afloat.India recently announced a Rs 1, 70, 000-crore relief package to protect the weaker sections of society during the lockdown, and stimulus packages for other sections may also be in the offing. Furthermore, the RBI has taken several measures including a 25-basis point interest rate cut and special Targeted Long Term Repo Operations (TLTRO) to deal with the economic effects of the pandemic.<h4 style="margin-left:0px;">&nbsp;</h4><h4 style="margin-left:0px;">Investing During A Pandemic</h4>Recessions and slowdowns drive investors away from the stock markets toward safer investments like government securities and fixed-income assets that come with a low rate of return. They also drive investors towards hard assets like gold which generates no regular income and real estate. Commercial property investment is a smarter option in the current scenario because it offers an inflation hedge while also generating fixed income. Unlike stocks, it is a tangible asset with real physical value.In the past, commercial real estate was way out of the reach of ordinary investors due to exorbitant prices. But the advent of innovative investment models such as REITs and fragmented ownership structures have brought it well within reach of ordinary investors. For the past three years, the commercial real estate segment in India has been growing at a rapid pace despite the housing slowdown. The current spate of lockdowns may have temporarily interrupted the growth of the sector which is likely to resume once the economy restarts.<h4 style="margin-left:0px;">&nbsp;</h4><h4 style="margin-left:0px;">Lockdown Market: Is This A Good Time To Invest in Commercial Property?</h4>Despite the gloom surrounding the economy, investors should consider&nbsp;investing in <a href="https://www.hbits.co/how-it-works">commercial real estate</a> in a ‘lockdown market’ right now in light of lowering interest rates and stimulus packages extended by the government and RBI which will have a significant effect on commercial property prices going forward. Below are some reasons why it may be prudent to invest in commercial property at this moment as opposed to investing when the economy starts opening up.&nbsp;&nbsp;<h4 style="margin-left:0px;">Temporary Dislocation in the market</h4>The current Covid-19 pandemic can lead to temporary dislocation in the commercial property market. Although&nbsp;<a href="https://hbits.co/properties">commercial properties</a>&nbsp;are fundamentally very strong with MNC tenants, rental-backed transparent valuations &amp; premium construction quality catering to institutional needs, many developers and property owners are looking to liquidate their properties due to unforeseen cash requirements during these turbulent times. Due to the liquidity crunch in the market, developers are turning to sell their cash-generating commercial properties at attractive valuations. Same is the case with commercial property owners who might find themselves in urgent need of liquidity and thus are looking to sell their commercial properties. Thus, many commercial properties are available in the market with strong fundamentals and attractive valuations.&nbsp;<h4 style="margin-left:0px;">Rising Inflation</h4>Bailouts promised by the government are expected to promote deficit financing which will have an inflationary effect on the economy. The lowering of interest rates by the RBI, too, will contribute to inflation in its own way. As a result, the cost of commercial property is likely to escalate in the future. Purchasing commercial property at this time will allow you to buy when the prices are still favorable and avoid price escalations.&nbsp;<h4 style="margin-left:0px;">Interest rate vs Capitalisation rates dynamics</h4>Falling interest rates are expected to have a direct impact on commercial property cap rates (which is similar to the inverse of what PE is for stocks). When interest rates decrease, cap rates can decrease and decreasing cap rates increase a property’s value as cap rates and commercial property prices are inversely related. With RBI eyeing more rate cuts, cap rates are also expected to decrease resulting in a price boom for commercial properties. Prudent investors may consider buying now to take advantage of the expected fall in cap rates.&nbsp;<h4 style="margin-left:0px;">Replacement costs</h4>Rising inflation will drive up the prices of new commercial real estate projects in an environment where businesses are still struggling to pick themselves up in the aftermath of the pandemic-induced slowdown. In such a situation, older properties will be more attractive for lessors and purchasers compared to newer, more expensive projects in a still-reviving economic environment. Also, delays in new projects due to liquidity issues in the real estate sector and prevailing market conditions will lead to lesser supply.&nbsp;<h4 style="margin-left:0px;">Portfolio diversification</h4>A good investment strategy involves portfolio diversification to hedge against market volatility. Most of the traditional investment options like Stocks, Mutual Funds, and PMS are highly correlated to the stock market and make the portfolio volatile during these uncertain times. Addition of commercial real estate investing can provide a stability in your portfolio as these assets have a very low correlation with the general market. The rents are generated by marquee tenants having strong business fundamentals, secured by rental agreements, and being a premium asset in established micro-markets, the prices are also less susceptible to volatility. Also due to regular rental inflow, these properties can enhance the liquidity of your portfolio thus preparing you better for these uncertain times.If you have the intention of investing in commercial real estate, the ‘lockdown market’ might be a better occasion than sometime in the future. Smart and prudent investors are always quick to spot an opportunity while others sit back and keep waiting for better times to come. Based on our analysis, there are many deals available in the commercial property space at good valuations and attractive rental yields which can provide stability to your portfolio. Given this excellent opportunity, one should consider including commercial property in their portfolio and reap the long-term benefits.

COVID-19 has sparked uncertainty but also opportunities in commercial real estate. Visit our website to learn more!

COVID-19: Ideal Time to Invest in Commercial Real Estate

Pandemics cause serious disruptions in the economy, but offer unique opportunities for prudent investors. Some core sector stocks might be wise investments right now.&nbsp;

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Has Covid-19 changed the real estate market forever? And should you be changing your investment strategy during this pandemic? You are not alone in asking these questions; hundreds of articles can already be found on the Internet on this subject. But before you make any investment decisions based on Covid-19, here are the REAL questions we must understand: ‘Is Covid-19 the only reason real estate has changed so much?’ And ‘What will the property market look like in the future, beyond the pandemic?”There’s no doubt that the Covid-19 pandemic has hit the real estate market hard, particularly residential properties. Thanks to the pandemic, residential sale values fell by 7% in 2020, while demand declined by 25% due to the mass reverse migration out of metro cities. While the slowdown in 2020 has not gone unnoticed by anyone, not everybody has spotted the fact that Covid-19 is not entirely to blame — in reality, residential realty has been falling rapidly over the past decade.<h4 style="margin-left:0px;">&nbsp;</h4><h4 style="margin-left:0px;">From dream investment to nightmare</h4>Even as the sun sets on residential property — for a few years, at least — it is rising rapidly in commercial real estate (CRE) in India. While residential realty has been falling since the global financial crisis of 2007-08, commercial real estate has been growing year after year in India. Last year, gross leasing of office space increased by 25% to an all-time high of 61.6 million sq ft, according to property consultant CBRE.If we crunch these numbers, this is what it would give us: A ₹20 lakh apartment would have given a return of ₹4.6 lakhs in 2011. Today, the same house will give a mere ₹56,000 for the entire year. Once you deduct the maintenance charges and property tax, and also account for inflation, very little profit would remain.Residential property was already plagued by a slowdown in the past five years, following the demonetization, the implementation of the Real Estate [Regulation and Development] Act (RERA), and the Goods and Services Tax (GST). What the pandemic has done though, is make the problem worse: people migrated back to their hometowns, leaving property owners without steady rental income; new projects were stalled due to lockdown and the ensuing manpower shortage; developers were left with a major cash crunch and liquidity issues and as a result, many constructions are delayed.Data shows that as many as 1,665 RERA-registered housing projects across India have been delayed by over five years. Property consultant Anarock projected that nearly 4.66 lakh under-construction homes scheduled for completion in 2020 could be delayed, while 4.12 lakh homes scheduled for handover in 2021 might not meet the deadline either. The number one reason for these delays year after year — aside from Covid-19 — is that many developers have over-leveraged themselves and as a result, have been facing liquidity issues. But this has had a major impact on buyer sentiment; customers who once considered property to be a safe bet, are now experiencing discomfort and loss of trust as their money is stuck in delayed projects.<h4 style="margin-left:0px;">&nbsp;</h4><h4 style="margin-left:0px;">Best bet: Fractional ownership of a pre-leased commercial asset</h4>Even as the sun sets on residential property — for a few years, at least — it is rising rapidly in commercial real estate (CRE) in India. While residential realty has been falling since the global financial crisis of 2007-08, commercial real estate has been growing year after year in India. Last year, gross leasing of office space increased by 25% to an all-time high of 61.6 million sq ft, according to property consultant CBRE.Commercial property has long been considered an investment only for the rich, due to the high entry barrier. But small-ticket investors are quickly picking up interest in this high-return asset class thanks to the concept of fractional ownership. Instead of one wealthy investor pouring in, say, ₹100 crores for a Grade A commercial property, fractional ownership allows 10 people to make a more affordable investment of ₹10 lakhs each, sharing the ownership and dividing the risk as well. This is what hBits specializes in, offering retail investors the most profitable, premium properties that are pre-leased and high in demand.<h4 style="margin-left:0px;">&nbsp;</h4><h4 style="margin-left:0px;">Indian realty on the rise</h4>While commercial realty witnessed a slight slowdown during the early months of the lockdown this year, it quickly picked up the pace again in Q3. As the economy reopened, net absorption increased by 63%, while new completions grew by 59% when compared to the preceding quarter. In fact, during the pandemic, premium commercial real estate — comprising Grade A office spaces that hBits specializes in — was the only property category that did not take a huge hit during the slowdown, particularly in India.<h4 style="margin-left:0px;">&nbsp;</h4><h4 style="margin-left:0px;">Read: Pandemic-proof Real Estate &amp; Financial investment post-Covid-19: Fractional ownership</h4>The fact that India’s commercial property market continues to thrive during the pandemic is something that has drawn the attention of many international and NRI investors, with other countries not faring as well. The CBRE recently reported that average rents in the US commercial sector are expected to fall by 6%, with a similar drop of 3%-5% in rental returns in major European cities such as London, Dublin, and Stockholm as well. On the other hand, in the same report, CBRE states that office leasing continues to grow in India due to its strong outsourcing sector. This is the reason why US and EMEA-based companies account for more than 63% of office space leased in India (100 million sq ft and 40 million sq ft respectively).In Dubai, rent has dropped by as much as 10%-20% year on year, depending on location. Compared to this, major cities in India have shown positive growth of 5%-12% in commercial real estate in the last few years.<h4 style="margin-left:0px;">&nbsp;</h4><h4 style="margin-left:0px;">How fractional ownership is different from REITs</h4>Demand for Indian commercial real estate is also evident in the recent over-subscription of India’s first REITs (Real Estate Investment Trusts) last year, raising ₹4,750 crores (US$ 679.64 million). While this robust response clearly demonstrates to investors — domestic and international — that the Indian commercial property market is ready for bigger and more players, REITs have their own disadvantages as well. The concept of REITs is similar to that of mutual funds, pooling money from many investors to purchase or finance income-producing properties, including both residential and commercial realty. The returns paid to investors come from the monthly rents, so there is a steady flow of income.However, unlike fractional ownership, REITs do not offer much in the way of capital appreciation. And similar to mutual funds, REIT investors cannot choose the particular properties that their money is poured into. Fractional ownership, on the other hand, provides complete control of both, asset selection and diversification. Over time as well, investors gain from both regular rental yield, as well as study capital appreciation.hBits ensures that investors enjoy complete access and transparency when it comes to their properties. All the information is live and accessible at the click of a button on the hBits digital platform. Not only can investors take virtual tours of the property, but they can also securely buy and sell their share of the property on the same platform. In addition, hBits only offers the best Grade A commercial properties that are completed and pre-leased, reducing the risk but ensuring high returns, unlike REITs, which invest in all kinds of properties. With this win-win formula of low risk and high returns, fractional ownership can be said to be similar to debt instruments and term insurance, while REIT is most similar to mutual funds, which can offer good returns but can also be more volatile.<h4 style="margin-left:0px;">&nbsp;</h4><h4 style="margin-left:0px;">Changing the future of realty</h4>In conclusion, the Indian real estate market is changing rapidly, regardless of the Covid-19 pandemic. Over the next decade, as residential values stagnate, more and more individual investors will see the benefit in the growing commercial real estate sector. hBits is at the forefront of this revolution, giving investors the convenience of fractional ownership of pre-leased commercial assets.

Make informed real estate investments with hBits. Stay ahead of the curve and learn what to consider for a profitable future investment. Read now!

Reality of Realty has Changed | How to Invest in the Future

Has Covid-19 changed the real estate market forever? And should you be changing your investment strategy during this pandemic? You are not alone in asking these questions; hundreds of articles can already be found on the Internet on this subject

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Here is a million-dollar question for wealth managers and advisers.&nbsp; Which OTC (over-the-counter) product in the Real Estate market has the largest leverage and why?&nbsp; At hBits, we know the answer. The answer is Fractional Ownership in the high-quality asset class.&nbsp; OTC products are retail purchases that don’t need a prescription or license to sell.&nbsp; E.g., in the pharmaceutical industry, OTC products are medicines that don’t require prescriptions. You can buy them directly from medical shops. And they are subject to fewer regulations.&nbsp; Quite similarly, OTC products in Real Estate is a process of how securities are traded via wealth managers without the supervision of a central exchange or third party. Mutual funds, Life insurances, stocks, commodities, and currencies are traditional OTC products.&nbsp; The benefit is that the trading of OTC products is considered more transparent, while at the same time keeping the trade price down.&nbsp; For any wealth manager, Fractional Ownership is a no-sweat decision. It is a decentralized over-the-counter decentralized product that can be sold between two parties without the friction of the exchange market. All that with fewer regulations.&nbsp; Fractional Ownership is a win-win for everyone.<h4 style="margin-left:0px;">&nbsp;</h4><h4 style="margin-left:0px;">What is this article about?</h4>In this article, we are going to compare traditional OTC finance products with hBits’ Fractional Ownership system. We will also go in-depth about the drawbacks and advantages of investing in OTC products, and how to overcome the relevant risks.&nbsp; We will also share how new-age <a href="https://www.hbits.co/">Fractional Ownership in the Real Estate </a>Distribution industry has been changing the financial market.<h4 style="margin-left:0px;">&nbsp;</h4><h4 style="margin-left:0px;">Introduction</h4>Andrew Carnegie famously said that over 90 percent of the world’s millionaires have earned their wealth from investing in real estate. The statistics are clear. The straightest way to a profitable investment is Real Estate.&nbsp; Similar to the American dream, there is the Indian dream where anyone regardless of their background, can attain their definition of success in society. Indian dream is about upward mobility for everyone. And one ideally achieves it through risk-taking and hard work.&nbsp; At hBits, we have redefined the risk-taking and hard work behind the Indian dream. Here, we have developed an ecosystem through which people can invest in high-value properties with guaranteed high returns.<h4 style="margin-left:0px;">&nbsp;</h4><h4 style="margin-left:0px;">Here is how hBits can help.</h4>Traditional property investments always have by-standing risks of vacancy and non-appreciation of rent, especially given the current pandemic.&nbsp; hBits acknowledges that the affordability of property has gone out of reach for many of us, and hence we bring the opportunity to everyone to live the Indian dream and therefore get on to the ladder of high investment returns.&nbsp; At hBits, we enable our clientele to buy a portion of a property with which they receive all the benefits of owning Real Estate without the requirement of huge upfront capital.&nbsp; Let’s compare it to the other products in the market, where selling products needs convincing and usually where the future of the product is uncertain. For say, under-construction properties where what is promised is rarely played in the future.&nbsp; Due to this, the property suffers. The middle man suffers, and most importantly, investors suffer.&nbsp; In our Fractional Ownership system, the assets are thoroughly checked to bring conformity to their quality, quantity, and identity. They are also free from traditional limitations.&nbsp; For example, contracts involving OTC products between two parties can handle large allocations of assets.<h4 style="margin-left:0px;">How can you benefit from Fractional Ownership?</h4>At the moment, fractional property investment is the best route the market knows to diversify one’s portfolio. And that happens by adding real estate property.&nbsp; Our online platform helps investors to hold a proportional entitlement to high-value properties with staggeringly more returns compared to traditional investment products. The average annual return of fractional Ownership over the years is about 11 percent.&nbsp; Fractional Ownership also helps in building a deposit. It consequentially solves the problem around estate investment affordability while at the same time promising long-term rentals.<h4 style="margin-left:0px;">&nbsp;</h4><h4 style="margin-left:0px;">Advantages of Investing with hBits’ Fractional Ownership System &nbsp;</h4>There are many reasons why Fractional Ownership works and why it is a no-brainer for wealth managers and advisors. Here are a few of my favorite reasons:<ol><li>The smaller businesses and individuals do not have qualifying exchange listing requirements or capital, but with hBits, they can still invest in commercial properties with high returns.</li><li>The administrative costs are tremendously low compared to the other investment options for investors.</li><li>It opens up the gates for new investment avenues and markets.</li><li>The online platform ensures that you do not have the limitation of being present at the physical location.</li><li>Another benefit is the diversification potential of Fractional Ownership, which provides a higher return per unit of risk.</li></ol><h4 style="margin-left:0px;">&nbsp;</h4><h4 style="margin-left:0px;">What are my exit options with Fractional Ownership? &nbsp;</h4>Compared to traditional investing, where the investors are blocked for a minimum period, Fractional Ownership on hBits has a much smoother exit option.&nbsp; You can sell your assets at any point to any interested buyer in or out of the platform. We also provide property listing within the platform where you can post your properties for interested buyers.&nbsp; We can learn from History.&nbsp; About 50 years ago, when people collectively bought the idea of investing in Mutual Funds, it bloomed like a Marigold flower on a hot summer day.&nbsp; Put simply, Fractional Ownership is Mutual Funds of 2020.<h4 style="margin-left:0px;">&nbsp;</h4><h4 style="margin-left:0px;">What’s the least I can invest in fractional Ownership?</h4>hBits offer small token sizes starting from 25 lakhs. We charge 1% on the investment and promise at least 10% capital appreciation per year over our most properties. We also charge 1% as an annual property management charge.&nbsp; At hBits, we believe in transparency and provide a clear account of the property tax and charge fee. We account for all fees and taxes before you sign up for any investment. And of course, the deal comes without any hidden fee.<h4 style="margin-left:0px;">&nbsp;</h4>At hBits, we believe in transparency and provide a clear account of the property tax and charge fee. We account for all fees and taxes before you sign up for any investment. And of course, the deal comes without any hidden fee.This profitable system of fractional Ownership has been prevalent in the west and has been consistently picking the pace in India. As per our research, we are expecting up to 30% growth in the demand for commercial properties in 2021.&nbsp; hBits promises a safe ecosystem, where you are given the most effective investment equation available in the Indian Real Estate distribution industry. At hBits, we are encapsulating the most promising OTC product in real estate for our users, Fractional Ownership. Let’s all get to the Indian Dream.&nbsp; As one of India’s top Fractional Ownership firms, we are committed to solving difficult problems around property investments. This is not just limited to simplifying the process but also successfully managing the risk of investment and answering difficult questions.&nbsp; In case you have a question for us, kindly <a href="https://hbits.co/contactus">Contact us.</a>&nbsp;We’ll get back to you at our earliest.

Unlock the potential of Indian real estate with fractional ownership. Discover the most promising OTC product with our expert insights. Learn more!

Fractional Ownership over the counter in Real Estate

Here is a million-dollar question for wealth managers and advisers. Which OTC (over-the-counter) product in the Real Estate market has the largest leverage and why? At hBits, we know the answer. The answer is Fractional Ownership in the high-quality asset…

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Last year was a rude awakening and gave us a stern lesson on the importance of stability. If retrenchments and salary cuts didn’t fray the nerves, the sudden closure of six debt mutual fund schemes last April certainly scarred the psyche of the cautious investor.And if fixed deposits were considered a safe haven, the paltry interest rates didn’t help matters. In fact, the Covid-19 crisis pushed down the FD rates to their lowest in a decade. From 9.5% in 2011 and 7% in 2019, the current return rates are hovering around the 5.5%-mark. After tax, the net return is under 4%, which is less than the country’s 10-year inflation rate. Simply put, FD investment is actually weakening your spending power in the long run!Unsurprisingly, risk-averse investors have been looking for a viable and attractive safe investment in a low-interest regime.Enter Fractional Ownership in Commercial Properties. This new-age investment is gaining steam because it allows small investors to put affordable sums in India’s booming, but hitherto expensive, commercial real estate market.Widely popular in the US, Europe, and Japan, fractional ownership (FA) is expected to grow to $5 billion in India in the next three years. The reason behind this is It’s democratizing the commercial property market by lowering the high entry barrier and high capital investment.Not to be confused with REITs, which are publicly listed and their pricing is subject to stock market volatility, fractional ownership (FA) is a traditional property investment.Imagine an Rs 50 crore commercial property. Typically, such a property would only be accessible to high-net-worth individuals (HNIs). But fractional ownership allows you to invest as little as Rs 25 lakh and be a part-owner of the property.&nbsp;<h4 style="margin-left:0px;">Rental Yield Adds Resiliency</h4>The fractional ownership model mainly focuses on Grade A commercial properties. These are the highest-quality office spaces that are recently constructed and equipped with top-of-the-line fixtures, amenities, etc. As a result, such properties charge a premium over the average rent in the vicinity.By investing through fractional ownership, one can enjoy rental returns between 8% to 12% per annum. This means that a Rs 25 lakh investment can fetch you returns of Rs 2-3 lakh every year, which is significantly higher compared to traditionally safer investments such as fixed deposits and debt funds. Compare it with residential properties, the same investment would give you Rs 50,000 to 85,000 return at best in a post-Covid world. As for gold, it has sharply fallen from a high of Rs 57,400 in August 2020 to Rs 47,900 in April 2021.Further, fractional ownership in commercial real estate offers stability because Grade A properties are usually leased out for a minimum of 5 years by some of the biggest corporates in the country, especially by the IT/ITes sector that typically enjoys healthy free cash flow due to their low capital-intensive business. Hence, this guarantees you constant rental returns every month.&nbsp;<h4 style="margin-left:0px;">Potential for High Capital Appreciation</h4>Commercial property investments have provided a 16% CAGR in the last five years. The future looks decidedly brighter due to robust occupier interest in traditional offices, co-working spaces, and flexible spaces.As per a Colliers International report, the leasing activity in the sector has grown at 12% CAGR in the last three years.Last year alone, despite the upheaval, the net absorption of commercial space stood at 25 million square feet. This year, the number is expected to breach the 30-million mark.In addition, the rentals are typically renegotiated every three years and can rise by as much as 15%, which can help you keep pace with the inflationary rate in the country and deliver you higher returns than other low-risk investments.&nbsp;<h4 style="margin-left:0px;">Weathering the WFH Factor</h4>Offices still remain intact. While the ongoing pandemic has upended the traditional playbook by introducing work-from-home, better VPNs, and video-conferencing tools, these measures are not sustainable for most businesses over the long term. This is primarily due to data security, psychological impact on employees, and monitoring productivity.

Uncover the pros and cons of crypto vs fractional ownership investing. Learn which suits your goals and why on hBits Blog. Discover now!

Crypto vs Fractional Ownership: The Investment Debate

Since the late 2000s, when Bitcoin made its debut as a pioneering cryptocurrency, it has taken the financial world by storm. The massive returns booked by early investors of Bitcoin has lent cryptocurrencies a cult-like status among new-age investors. Currently there are many investors who vouch for it..

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Fractional Real Estate – Tailor-made for the millennial investor!‘Millennial’ is a term used to describe people who were born in the last two decades of the 20th century. Millennials will be in their early twenties to early forties today. It means that they will be professionally active for at least two decades before they hang up their boots.&nbsp;In case of money, compounding is the eighth wonder of the world as they say. It means that if you invest in assets that yield consistent returns over a period, you will create wealth. The trick is to identify an asset that can tilt the risk-reward ratio in your favor. It means that the asset should be less risky so that your initial investment is preserved and then it yields a good return over and above what ‘fixed income’ instruments can offer so that you can compound your money in the years ahead.&nbsp;Fractional Ownerships of Commercial Real EstateWhile the young people and the millennial audience is aware of asset classes such as Equities, Mutual Funds investing in equities and debt, fixed-income assets, and even cryptocurrencies and NFTs, they may not have focused much on Fractional Ownership.&nbsp;In layman's terms, Fractional Ownership (FO) is the distribution of ownership of a very expensive and high-value asset that yields consistent return and provides capital appreciation over time. FO in commercial real estate enables young people to invest a sum of money and own fractions of grade-A commercial real estate. Their ownership corresponds to the amount they invest. The ownership comes in ticket sizes such as INR 25 Lakhs and for every such ticket that you invest in, you start owning a portion or ‘fraction’ of the real-estate asset.&nbsp;In the post-pandemic year, there has been a tectonic shift in the mindset toward investing, especially among young people in India. One can see a lot of participation across equity markets and other so-called non-traditional asset classes.&nbsp;Fractional Ownership is getting young people and millennials into the property market as well. For a generation that prefers an Uber/Ola over owning a car, a rented apartment over buying a house, etc., this is a transformational shift. This generation prefers access over ownership but the trends in FO in grade A commercial real estate indicate a very different trend.&nbsp;Millennials such as Mr. Noaman Naik, working at Deloitte, have taken to FO investments seamlessly. With hBits as a platform, they have had an enriching experience while making such investments largely due to the transparency and ease of investment understanding that such platforms provide. His experience is summarized in the quote below:&nbsp;"I have invested in 2 properties with hBits. The first time the ownership processes were super smooth; my rentals and all related formalities were managed without any glitches, to the extent that the real-time dashboard always kept me updated on the rental returns. The success that I attained gave me the courage to reinvest again because I was sure that it was the best way to balance my portfolio. And why not? The stock markets are volatile...the Fed rate hike is coming...the Russia-Ukraine crisis...these reasons will make the stock market investment even dicier. But with hBits' properties delivering 8%-10% rental yield and 5%-10% appreciation, it makes absolute sense to invest my money with hBits."&nbsp;What changes for the young investors?Just like the above quote, FO is today as easy as buying mutual fund units or shares of the companies that you like. The young investor or millennial could be anywhere and seamlessly invested in the FO opportunity. They gain a rental yield of around 8% per annum and a capital appreciation of over 5% even if we consider conservative estimates based on historic data. If you look at a traditional investment such as a fixed deposit, investments like FO yield around 27.37% more return on investment over a five-year period.&nbsp;If you want to know more about the mathematics behind this, please&nbsp;<a href="https://hbits.co/">click</a>&nbsp;here and drop an interesting inquiry to us.Moreover, it scores over residential real estate as below:&nbsp;<ol><li>Tenants in such commercial properties are high quality and reputed MNCs or large companies which come with a lock-in period hence you do not have to scout for tenants.&nbsp;</li><li>The legal workaround tenancy, agreement as well as the collection of rent will be taken care of by the commercial real estate management company or owners of the commercial real estate.&nbsp;</li><li>The asset will appreciate and the rental yield with such properties is assured as reputed companies are unlikely to default on rent payments.&nbsp;&nbsp;</li><li>While you own a fraction, you do not have to maintain the corporate premises as it is managed by the real-estate company.&nbsp;</li></ol>While the hassles are away, you get to enjoy a capital appreciation of 5% and a rental yield of around 8%. Can investment in real-estate get any easier and more efficient? Would there be an option that can yield a higher return while relieving you of hassles with respect to the management of the asset? The answer is likely to be ‘No’, and hence fractional ownership is the way to go.&nbsp;Young people or millennials who buy such fractions can check the status of their investments and estimated returns anytime through a secure dashboard provided by hBits. They can sleep easy while their money invested in fractional ownership of commercial real-estate works hard for them.&nbsp;While FO is attracting young people into the market, there is still a long runway for participation, and we will see a lot of investments in fractional ownership in the years to come. As the asset class becomes popular and demand increases, the prices of fractions will also rise, and early investors are likely to earn well from such price appreciation in addition to the estimated rental yield that they would be enjoying as a reward for their patience and conviction in an unconventional asset class.&nbsp;Have you invested in Fractional Ownership yet? Learn how and take the first step today.

Young investor? Enter the property market with ease through fractional investing. Learn the ins and outs on the hBits blog. Start exploring now!

Young People's Entry via Frac. Real Estate Investment

‘Millennial’ is a term used to describe people who were born in the last two decades of the 20th century. Millennial will be in their early twenties to early forties today. It means that they will be professionally active for atleast two decades before they hang up their boots. &nbsp;

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The Indian commercial real estate market is expected to witness a surge in demand for more reasons than one. Indian Prime Minister Shri. Narendra Modi has set up a vision for the country to become a five trillion-dollar economy by 2024-25. To achieve this, the government has been implementing various programs such as ‘Make in India’ and offering Production Linked Incentives (PLI) across ten key sectors such as Textile, Pharmaceuticals, Electronic Products, etc. This has led to an increase in job creation and demand for commercial real estate. Globally reputed brands are setting up their offices in India.The accelerated Digitization push:&nbsp;The accelerated digitization push across sectors has led to IT companies hiring at an unprecedented pace and creating jobs faster than ever. They have also begun to set up more development centers across Tier-2 and Tier-3 cities to enable employees to work and stay closer to their homes rather than migrating to far away metros. This has led to a further push in commercial real estate. Large international brands have also set up their offshore development centers and captive centers in India which further accelerates the demand for commercial real estate.The hybrid model of work:The hybrid model of work has also led to a surge in demand for office spaces as many companies are now opting for co-working spaces so that they can enable their employees to enjoy a flexible model of working.&nbsp;A JLL Report predicts that India’s co-working market is likely to cross 50 million square feet by 2023. The adaptable office space is expected to grow at around 15-20 percent per annum consistently for the subsequent three to four years. This factor, coupled with the rapid rise in Datacenters and cloud adoption is also going to create a tremendous increase in demand for commercial real estate. It is no surprise then that various avenues for investments in commercial real estate are being offered to investors. These include – REITs and Fractional Ownership among others.How do REITs work?Let’s first understand what a Real Estate Investment Trust (REIT) is. REIT is a company that owns, operates, or finances income-generating real estate. The REIT enables individual investors to invest in very expensive commercial real estate and earn dividends to the extent of their investment. REITs pay as much as 90% of their earnings back to investors by way of dividends. The advantage for investors is that they may not have to buy the property in its entirety. They also do not have the onus of finding tenants, taking care of lock-in agreements, and maintaining the property while they can still enjoy a large part of the earnings generated by commercial real estate.Is Fractional Ownership a better option?Fractional Ownership democratizes access to Grade A commercial real estate. It is no more an exclusive playground of the ultra-rich. Investors can buy ‘fractions’ of high-quality commercial real estate occupied by highly reputed companies. hBits has currently enabled investors to invest in such premium real estate by enabling you to buy ‘fractions’ for as less as INR 25 Lakhs. Well, that’s way lesser than what you would pay for a 1 BHK flat in Mumbai. Not to mention that you needn’t scout for tenants, maintain the property, collect rent, or work on agreements. You can enjoy a consistent rental yield and sell the fraction at any time through a seamless digital interface. This is because such real estate offers not only a consistent rental yield but also appreciation in the capital due to the ever-increasing demand for premium commercial real estate.Does Fractional Ownership score over REITs?India’s first REITs which came in the first half of 2019 raised ₹4,750 crores (US$ 679.64 million). It saw interest from both domestic and international investors. This clearly indicates that commercial real estate in India is an attractive proposition that can make one safely assume that rental yield and capital appreciation are going to rise. However, while REITs investors may get dividends that come from the monthly rental income earned by commercial real estate, they may not enjoy much in terms of benefits due to capital appreciation.With fractional ownership, the investor can select the property into which he or she invests. Investors can take an informed decision on investing in the property through fractional ownership. The decision can consider various factors such as the location, type of tenants, proximity to airport and business districts, etc. This can enable them to enjoy a rental yield and capital appreciation over time.hBits – A transparent platform for fractional ownershiphBits has been working at the intersection of finance, real estate, and technology to create a seamless digital interface (web portal) that can enable investors to have real-time access to the value of the fractions they purchase. With hBits, an investor can buy the fraction in just a few clicks. What’s more, he can monitor the value of the fraction, the rental yield, and the income that his fraction has generated over time. The sale of the fraction can also be initiated with just a few clicks. The greatest fear of a real estate investor – the illiquid nature of the asset – is thus taken care of. With hBits, buying a fraction of commercial real estate is as simple as buying a stock. The fraction ensures not only a share of the steady monthly rental income but also capital appreciation over time.Fractional Ownership – The future of Commercial Real Estate&nbsp;While the Fractional Ownership v/s REITs debate can rage on, the Commercial Real Estate market is massive, and such investment avenues can co-exist. Over time, investors will clearly realize the difference in terms of their returns and the ease of managing such investments and make their own ‘prudent’ choice to settle this debate.

Unravel the mystery of REITs vs. Fractional Ownership with hBits Blog. Discover the best investment option for you, read now and make a well-informed decision!

REITs v/s Fractional Ownership | What should you pick & why?

The Indian commercial real estate market is expected to witness a surge in demand for more reasons than one. Indian Prime Minister Shri. Narendra Modi has set up a vision for the country to become a five trillion-dollar economy by 2024-25. To achieve this, the government has been implementing various programs such as ‘Make in India’ and offering

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Last year was a rude awakening and gave us a stern lesson on the importance of stability. If retrenchments and salary cuts didn’t fray the nerves, the sudden closure of six debt mutual fund schemes last April certainly scarred the psyche of the cautious investor.&nbsp;&nbsp;And if fixed deposits were considered a safe haven, the paltry interest rates didn’t help matters. In fact, the Covid-19 crisis pushed down the FD rates to their lowest in a decade. From 9.5% in 2011 and 7% in 2019, the current return rates are hovering around the 5.5%-mark. After tax, the net return is under 4%, which is less than the country’s 10-year inflation rate. Simply put, FD investment is actually weakening your spending power in the long run!&nbsp;Unsurprisingly, risk-averse investors have been looking for a viable and attractive safe investment in a low-interest regime.&nbsp;Enter&nbsp;Fractional Ownership in Commercial Properties. This new-age investment is gaining steam because it allows small investors to put affordable sums in India’s booming, but hitherto expensive, commercial real estate market.&nbsp;&nbsp;Widely popular in the US, Europe, and Japan, fractional ownership (FA) is expected to grow to $5 billion in India in the next three years. The reason? It’s democratizing the commercial property market by lowering the high entry barrier and high capital investment.&nbsp;Not to be confused with REITs, which are publicly listed, and their pricing is subject to stock market volatility, fractional ownership (FA) is a traditional property investment.&nbsp;Imagine a Rs 50 crore commercial property. Typically, such a property would only be accessible to high-net-worth individuals (HNIs). But fractional ownership allows you to invest as little as Rs 25 lakh and be a part-owner of the property.&nbsp;&nbsp;<h4 style="margin-left:0px;">Rental Yield Adds Resiliency</h4>The fractional ownership model mainly focuses on Grade A commercial properties. These are the highest-quality office spaces that are recently constructed and equipped with top-of-the-line fixtures, amenities, etc. As a result, such properties charge a premium over the average rent in the vicinity.By investing through fractional ownership, one can enjoy rental returns between 8% to 12% per annum. This means that a Rs 25 lakh investment can fetch you returns of Rs 2-3 lakh every year, which is significantly higher compared to traditionally safer investments such as fixed deposits and debt funds. Compare it with residential properties, the same investment would give you Rs 50,000 to 85,000 return at best in a post-Covid world. As for gold, it has sharply fallen from a high of Rs 57,400 in August 2020 to Rs 47,900 in April 2021.Further, fractional ownership in commercial real estate offers stability because Grade A properties are usually leased out for a minimum of 5 years by some of the biggest corporates in the country, especially by the IT/ITes sector that typically enjoys healthy free cash flow due to their low capital-intensive business. Hence, this guarantees you constant rental returns every month.&nbsp;&nbsp;<h4 style="margin-left:0px;">Potential for High Capital Appreciation</h4>Commercial property investments have provided a 16% CAGR in the last five years. The future looks decidedly brighter due to robust occupier interest in traditional offices, co-working spaces, and flexible spaces.As per a Colliers International report, the leasing activity in the sector has grown at 12% CAGR in the last three years.&nbsp;Last year alone, despite the upheaval, the net absorption of commercial space stood at 25 million square feet. This year, the number is expected to breach the 30-million mark.&nbsp;&nbsp;In addition, the rentals are typically renegotiated every three years and can rise by as much as 15%, which can help you keep pace with the inflationary rate in the country and deliver you higher returns than other low-risk investments.&nbsp;&nbsp;<h4 style="margin-left:0px;">Weathering the WFH Factor</h4>Offices still remain intact. While the ongoing pandemic has upended the traditional playbook by introducing work-from-home, better VPNs, and video-conferencing tools, these measures are not sustainable for most businesses over the long term. This is primarily due to data security, psychological impact on employees, and monitoring productivity.&nbsp;In a nutshell, financially savvy investors should deeply deliberate over fractional ownership in commercial real estate and look to stay ahead of the curve by grabbing a slice of a lucrative — yet stable — market once monopolized by the HNIs.&nbsp; &nbsp;

Invest in Commercial Properties with Fractional Ownership - the new investment option that lets you be a part of India's growth with affordable sums. Read More

Secure High Returns with Fractional Real Estate Post-COVID

Last year was a rude awakening and gave us a stern lesson on the importance of stability. If retrenchments and salary-cuts didn’t fray the nerves, the sudden closure of six debt mutual fund schemes last April certainly scarred the psyche of the cautious investor.

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Let’s do what we enjoy while the money keeps flowing into our bank account every month. Love the sound of it? Good news. It is achievable too. Try ‘Fractional Ownership’.<h4 style="margin-left:0px;">What is Fractional Ownership?</h4>It is percentage ownership of a very high-value tangible asset wherein several unrelated individuals can own ‘fractions’ of an asset and enjoy the returns and capital appreciation proportionately. The risk, however, is mitigated to a large extent.Consider a well-managed pre-leased commercial real estate. As it is occupied, the monthly rentals will ensure a steady income flow. Further, the furnishing, fit outs, and shared services such as concierge, technical support, etc. are paid for by the tenants resulting in multiple income streams. The rental agreements come with a lock-in period of three to five years, so the revenue is assured and recurring in nature. Also, the companies which occupy such premium real estate are reputed firms with very good credit ratings hence less chance of default.<h4 style="margin-left:0px;">What will the value of my ‘fractional ownership’ be in five years?</h4>Let’s say you invest INR 25 Lakhs to own a ‘fraction’ of this premium commercial real estate. Let us assume rental yield at 8% per annum which is higher than the interest earned through a savings account, fixed deposit, or any other fixed income assets. The return per year on your investment would be INR 2 Lakhs or 10 Lakhs over a five-year period. We have not factored in the regular increase in rentals here.The premium real estate occupied by reputed companies would be in a very accessible and popular part of the city and may appreciate at around 7% per annum. Hence, in five years, the value of your fractional ownership would appreciate to INR 35.6 Lakhs.The total value of your investment in five years would be INR 45.6 Lakhs which is more than 80% appreciation in 5 years. Such returns can easily compete with the best financial instruments available in the market today.<h4 style="margin-left:0px;">How can it set you on the path to Financial Freedom?</h4>Compounding, they say, is the eighth wonder of the world. If you start re-investing your returns into premium commercial real estate on a ‘fractional ownership’ basis, you will own multiple ‘fractions’ over time and it would create multiple recurring revenue streams. The best part is that these returns are hassle-free and managed by a professional ‘fractional ownership’ platform on your behalf while you enjoy transparent and clear insights on the returns that you make.These multiple income streams may soon set you on a path to ‘financial freedom’ – which means that your investments will yield more returns than the cost and expenses that you incur every month.With ‘fractional ownership’, you can embark on a journey to financial freedom – hassle-free and with very less risk. What more can you ask for as an individual investor?<h4 style="margin-left:0px;">How does ‘Fractional Ownership’ led to Financial Freedom change your life?</h4>Relatively Low-Risk Investment: The clear mantra in the financial markets is that the greater the risk, the greater is the return. However, in the case of fractional ownership, the downside risks are limited. With professionally managed companies taking care of your ‘fractions’, you can sit back and enjoy the show. There are very few investments that return more than 10% per annum over five years with limited risk, hence ‘fractional ownership’ is a rarity.Build your corpus of Emergency funds: The steady return that you generate from ‘Fractional Ownership’ can be left untouched and used as a corpus to navigate a ‘rainy day’. An emergency such as an accident, health issue, etc. will come unannounced. However, becoming prepared for it financially is in your hands and ‘fractional ownership’ is a very positive step towards it.Enhance Real-Returns on your investments: Inflation at around 5% normally eats into the real returns that you make on your investments. Hence, any investment which returns less than 5% doesn’t add much value to the real returns that you make. Your savings account in most banks in India may return 4% or even less per annum. A Fixed Deposit at 6%-7% may just beat inflation but is still not efficient in terms of returns. On the other hand, ‘Fractional ownership’, which yields more than 80% return in five years, can enable you to beat inflation with real returns. Why not make your money as responsible and hardworking as you are? Start with ‘fractional ownership’ today. It is better explained in the table below and the additional amount that you might make on your investment over a five-year period is significant.&nbsp; &nbsp; &nbsp;Fixed Deposit&nbsp;Capital Appreciation (8% Simple Interest) Rental Yield (7.32%) Total Amount Difference in returns&nbsp;&nbsp; &nbsp; Invested Amount&nbsp;Rs 25,00,000 Rs 25,00,000&nbsp;&nbsp;&nbsp; &nbsp; &nbsp;&nbsp;&nbsp;Year 1 (Principal+Interest Rs 26,75,000 Rs 2,00,000 Rs 26,83,000 Rs 28,83,000 Rs 2,08,000&nbsp;&nbsp;&nbsp;&nbsp;Year 2 (Principal+Interest) Rs 28,62,250 Rs 4,00,000 Rs 28,79,396 Rs 32,79,396 Rs 4,17,146&nbsp;&nbsp;&nbsp;&nbsp;Year 3 (Principal+Interest) Rs 30,62,608 Rs 6,00,000 Rs 30,90,167 Rs 36,90,167 Rs 6,27,560&nbsp;&nbsp;&nbsp;&nbsp;Year 4 (Principal+Interest) Rs 32,76,990 Rs 8,00,000 Rs 33,16,368 Rs 41,16,368 Rs 8,39,378&nbsp;&nbsp;&nbsp;&nbsp;Year 5 (Principal+Interest) Rs 35,06,379&nbsp;Rs 10,00,000 Rs 35,59,126&nbsp;Rs 45,59,126&nbsp;Rs 10,52,746&nbsp;&nbsp;&nbsp; &nbsp; &nbsp;&nbsp;&nbsp;Total Difference in returns over a 5-year period&nbsp;10,52,746&nbsp; &nbsp; &nbsp;Isn’t it just fantastic that you will make more than Rs. 10 Lakh over five years with fractional ownership than in a Fixed deposit if you invest Rs. 25 Lakhs? It’s time to give it some serious thought.Kick ‘compromise’ out of the window: No more compromises in life. Send your children to the best schools. Fund your dream house, car, or electronic gadget today. It's time to go the ‘fractional ownership’ way, attain financial freedom and create a happy future for your family and you.Why wait?&nbsp;<a href="https://hbits.co/how-it-works">Buy your first ‘Fraction’ today.</a>

Achieve financial freedom with low risk. Discover the benefits of fractional ownership and how it can help you reach your goals through the hBits Blog.

Fractional Ownership: Minimal Risk, Financial Freedom

Let’s do what we enjoy while money keeps flowing into our bank account every month. Love the sound of it? Good news. It is achievable too. Try Fractional Ownership

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Mutual funds invest in Equity or Debt. India has had a savings-to-GDP ratio of close to 30% or more since a long time. However, more than 80% of these savings are used to go into physical assets such as real estate and gold. The scenario has changed in favor of financial assets after making SIPs in Mutual Funds a popular option. With discount brokers tapping the vast Indian market, the number of Demat accounts has increased manifold too.&nbsp;The key takeaway is that technology and awareness can disrupt a traditional market. It has brought about a culture of investments in the stock markets, either directly or through mutual funds.&nbsp;Can the same disruption be brought into real estate?The stock market and mutual fund industry went about creating investment convenience by leveraging technology and enhancing awareness to increase the mass appeal and understanding of their products. The real estate industry could take a leaf from this book.&nbsp; &nbsp;Fractional Ownership – Is it SIP equivalent for Real Estate?Let us first understand what ‘Fractional Ownership’ (FO) in commercial real estate is. For a millennial or a working professional, a residential real estate investment entails taking a loan and servicing its principal and interest for a period of twenty years or more. Investment in Grade A commercial real estate just seems out of question.&nbsp;With Fractional Ownership and the use of technology, it is very easy for professionals to make a safe investment in real estate. The principal investment is not as low as SIP, but it is much cheaper than the investment for a 1-Bhk flat in a city like Mumbai.&nbsp;Why is it considered ‘safe’?‘Fractional Ownership’ enables you to gain ownership of a ‘fraction’ of grade A commercial real estate. The investment could be as low as Rs.25 Lakh to own a fraction. Now, let’s compare that with owning a house as an investment and earning a rental income: -&nbsp;<ul><li>Finding Tenants: -&nbsp;If you own a house and do not occupy it yourself, you may have to find a tenant so that you can earn a rental yield on the asset. Finding the right tenant may take time. Further, due to unprecedented events such as COVID, there could be long periods of time wherein the flat that you own couldn’t be let out. In such a case, you lose the potential rental yield while you pay EMIs for the flat every month. The actual yield of your account for the interest you pay on the loan for the said flat may be very less. With Fractional Ownership (FO), the company managing the Grade A commercial Real estate will scout for the tenant. They have long-term contracts of usually three years or more and lock-in agreements with reputed companies. Hence, you are unlikely to lose rental income and yield for the fractions that you own.&nbsp;</li><li>Management, Maintenance, and Repair: -&nbsp;The owner of a house must constantly manage and repair his house. They must address complaints regarding facilities that come from the tenant and resolve them. It consumes the time and effort of the owners of such flats. With fractional ownership, the maintenance and management of the property are taken care of by the company managing it. They are professionals who would take care of managing the upkeep requirements of the tenants who occupy spaces in the properties that you have purchased fractions in.&nbsp;</li><li>Assured Returns:&nbsp;- Grade A commercial real estate, unlike residential properties, is normally located in business centers or popular parts of the city. Such spaces are always in demand and there are MNCs or highly reputed companies that are always looking out for such properties. Hence, the rental yield and capital appreciation of ‘fractions’ owned by the investors are almost assured.&nbsp;</li></ul>Due to these reasons, there is a very minuscule possibility that your rental yield or capital appreciation will be compromised. On the contrary, data shows that one can safely assume a capital appreciation of 5% and a rental yield of 8% per annum over a five-year period.&nbsp;So, it is comparatively safer than riskier assets and it yields more capital appreciation than the safer assets. The fact that it is a derivative of real estate makes it far more appealing and interesting for consumers.Can it create wealth in the long term like SIPs?If you look at a traditional investment such as a fixed deposit, then fractional ownership in grade A commercial real estate can yield 27.37% more return on investment over a five-year period.&nbsp;If you want to know more about the mathematics behind this, please&nbsp;<a href="https://hbits.co/">click</a>&nbsp;here and drop an interesting inquiry to us.&nbsp;Like a Mutual Fund SIP with a dividend reinvestment plan, if you start investing the rental yield and capital appreciation back to own more fraction, it can create tremendous wealth over time, especially for youngsters and millennials.&nbsp;If you are disappointed that you missed the post-pandemic ‘real estate’ boom, don’t worry. Get onboard the fractional ownership bandwagon and create a brighter future for your loved ones and yourself.

Invest smartly in real estate with a Systematic Investment Plan (SIP) at hBits. Enjoy the benefits of a steady investment strategy. Start today!

Did you wish there could be a (SIP) in real estate?

‘Mutual Funds sahi hai’ (‘Mutual Funds are apt/correct/right for investments). There is an extensive campaign around SIPs in Mutual Funds urging users to save by investing as less as Rs.500 per month and grow the wealth over a period. It is prudent to have experts in financial markets managing your…

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Commercial Property purchase can seem daunting owing to the complex due diligence process and is fairly specialized in nature. Traditionally it has been accessible to only Institutions and High Net Worth Individuals. But with the options available now, the market is open for all. So, it is understandable for investors to have less grasp of commercial real estate compared to other modes of investment like stocks and residential property.At the same time, the “opaque” tag does great injustice to the sector given its status as a proven means of wealth creation all around the world. Commercial real estate purchases can be as simple as buying a stock, which we will explain in a series of articles. My hope is that, after reading the articles, you will understand commercial real estate to see it as a viable investment option with the potential for high returns and stability.&nbsp;<h4 style="margin-left:0px;">Importance of Valuation</h4>Valuation is one of the most important aspects of understanding commercial real estate. It is fundamental to grasping the workings of the commercial real estate industry as valuation is the key criteria to assess any commercial property to purchase. Valuation determines the soundness of an investment and helps in the identification of attractive assets.<h4 style="margin-left:0px;">&nbsp;</h4><h4 style="margin-left:0px;">Different Approaches to Valuation</h4>Despite the importance of commercial property valuation in India, it can seem somewhat complex in the beginning but by using simple financial assessment tools one can understand valuation and use it to their advantage. While shares are priced on the basis of demand and supply, and the valuation of residential property is the result of market comparisons, commercial real estate has various micro-market-related parameters due to the nature of the asset and the market.What differentiates commercial real estate from other investment options? First, its identity as a regular rental asset demands a financial valuation. Second, the pricing of commercial real estate is heavily influenced by numerous external factors over which one has no control like interest rate, economic outlook, population and demographics, supply &amp; demand, and property market performance, which might add complexity to the pricing.Given this situation, one option for valuers is to view the property purely from an income generation point of view. This is called the ‘capitalization rate approach’. This is one of the more popular commercial real estate valuation methods in the context of income-generating properties and investments, using hard numbers as their basis.<h4 style="margin-left:0px;">&nbsp;</h4><h4 style="margin-left:0px;">Capitalization Rate Approach</h4>The capitalization rate approach is used to calculate the value of an income-generating property by assessing likely future earnings. It is encapsulated in the following equation:Total Value of the Property = Net Operating Income/Capitalisation Ratewhere net operating income (NOI) is the net earnings generated from the property in one year and the capitalization rate is the ratio of NOI to property asset value.&nbsp;<ul><li>Net Operating Income: It indicates the income generated from the property on an annual basis which is very stable due to lease agreements in place and gives a frame of reference for future earnings. To derive NOI, several inputs are needed including total rent, CAM charges, insurance, and property tax. All expenses are subtracted from the rent to obtain NOI.</li></ul>&nbsp;CAM refers to ‘common area maintenance’, or building maintenance charges. Note that a distortion in any of the inputs like rent or CAM is likely to end up distorting the NOI and ultimately the valuation. A quick cross-check with similar properties in the area is thus recommended. This ensures that the inputs going into the calculation are in line with the respective market rates.How do flawed inputs distort NOI and valuation? Let us take an example. If the rent of a certain property is higher than the market value, the investor may benefit for a short period but it will almost certainly lead to a correction whenever a vacancy arises and a new tenant moves in. Additionally, it will inflate the valuation precipitating a correction in the selling price of the property. So, while higher-than-market-rate rents may benefit the owner in the short term, they could be counterproductive in the medium and long term. This can be avoided by ensuring that the inputs that go into the NOI, and consequently the cap rate method, are rational and in line with existing market rates.&nbsp;<ul><li>Capitalization Rate: Capitalization rate or cap rate is similar to the inverse of the PE ratio in stocks. If the PE ratio is derived from a division of price by earnings, dividing earnings by price will help you obtain the capitalization rate of a property.</li></ul>&nbsp;A lesser-known fact is that the cap rate is equal to the discount rate of a property which can be mathematically expressed as follows:Cap rate (NOI/Purchase Price) = Present Value of Growing Property (D1/r-g)where ‘D’ is the dividend or coupon at Period 1, ‘r’ is the discount rate, and ‘g’ is the growth rate.Once the cap rate and NOI are obtained, the price can be easily calculated using the formula provided at the beginning of this section. But the result still needs to be validated using alternative valuation measures.<h4 style="margin-left:0px;">&nbsp;</h4><h4 style="margin-left:0px;">Sanity Checks &amp; Adjustments</h4>How do we know that the results obtained through the cap rate approach are credible? Here, sanity checks play an important role. These are useful in determining whether the real estate property valuation is on the right track and also in fine-tuning the result to arrive at the final outcome.Two types of sanity checks are applied in this case to ensure that the values are in line with market rates.<h4 style="margin-left:0px;">&nbsp;</h4><h4 style="margin-left:0px;">Sales Comparison</h4>In this instance, a comparable property is selected to assess whether the building in question is being overvalued or undervalued as compared to prior transactions in the area.Neither overvaluation nor undervaluation is desirable as they do not reflect the true market value of the property. An overvalued property will encourage future buyers to forego your premises affecting your overall return. An undervalued property based on the cap rate, on the other hand, would imply that the building is rented at below market rates and one must investigate further for why this is the case.<h4 style="margin-left:0px;">&nbsp;</h4><h4 style="margin-left:0px;">Replacement Cost Approach</h4>If you were buying or selling a property, wouldn’t you like to know what it would cost to construct that same building from scratch in today’s context?The cost of constructing a property today would naturally be higher than what it was in the past. The replacement cost measure gives valuers an idea of the present-day cost of construction of the property and facilitates alignment between the two prices.As the last step, the different results are compared and a subjective approach is adopted to arrive at the final outcome. For example, if it is observed that the cap rate method puts the value of the building at Rs 9, 000 per sq ft, while the transaction of a comparable building happened at Rs 10, 000 per sq ft, it could mean our valuation is below the market rate and the price is revised upward to bring it in line with market levels.<h4 style="margin-left:0px;">&nbsp;</h4><h4 style="margin-left:0px;">Getting the Valuation Right</h4>Valuation is a fundamental aspect of the commercial property business and spells the difference between a good investment and a bad one, and between making money and losing money. Several factors hinge on the valuation of a property giving it the power to affect your income in the long term. Reliable valuation lies at the heart of the commercial property business. It is the starting point of every prudent investment. Using a sound valuation technique enables one to purchase the right commercial property and start on the journey of wealth creation.

Get a comprehensive understanding of commercial property valuation with our expert insights. From methods to latest news, we have you covered. Read now!

All You Need to Know About Commercial Property Valuation

Commercial Property purchase can seem daunting owing to complex due diligence process and is fairly specialised in nature. Traditionally it has been accessible to only Institutions and High Net Worth Individuals. But with the options available now, the market is…

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First of all, what is&nbsp;<a href="https://www.hbits.co/">fractional ownership&nbsp;</a>of property? What this means is that hBits brings together a group of investors who can each invest ₹25 lakhs onwards and jointly purchase a premium commercial property. In this manner, investors can now own a share or portion of a Grade A commercial property for a fraction of its cost, enjoying the higher rental income and capital gains while dividing their risk. Basically, a share in a premium (both, quality and rental yield) real estate property can be acquired for Rs. 25 lacs, which could earlier be done only with a minimum investment of Rs. 5 crores.<h4 style="margin-left:0px;">&nbsp;</h4><h4 style="margin-left:0px;">How we structure your investment</h4>But how do we do this? hBits forms a Special Purpose Vehicle (SPV) for the acquisition of the Grade A pre-leased property — this is an entirely separate company in which the individual investors are members and independent professional directors are appointed. hBits merely stays on as the property manager in this arrangement.This serves various purposes — it helps to pool the funds together, it ensures that ownership and control of the Grade A Property lie with investors, SPV does not have any other asset or liability and consequently, the Grade A Property is ring-fenced from any third-party liability, and also allows the division of profits proportionate to the investment made by each member.Now the following bit is important to remember because this is the real ingenious solution. Each investor’s contribution is split in two —<ol><li>Shares of the SPV</li><li>Compulsory Convertible Debentures (CCD), which is simply a financial instrument through which you, the investor, are lending money to the SPV and earning interest income which is linked to the rental yield</li></ol>Once the property has been purchased, the rental yield will be distributed to investors not as rental income per se, but as interest on their CCD.<h4 style="margin-left:0px;">&nbsp;</h4><h4 style="margin-left:0px;">How real estate is taxed</h4>Real estate is taxed in three ways in India – (i) Tax on rental income, (ii) Tax on capital gains, and (iii) Property tax.<ol><li>Property tax:</li><li>This is the tax paid to the municipal authorities or local government bodies. The tax rate varies by location and is decided by the local authorities and imposed annually or semi-annually.</li><li>Property tax is the first to be levied on the total rental income or Gross Annual Value of the property. Upon subtracting property tax, we arrive at Net Annual Value, based on which we calculate deductions</li><li>Rental income tax:</li><li>Any rental income received from a property that has been let out is taxed under the head ‘Income from house property. As per Section 24 of the Income Tax Act, 1961, all rental income is to be taxed under this head, be it residential or commercial.</li></ol><ul><li>The same Section also allows every taxpayer a standard deduction of 30% from the rental income. This 30% is chalked up to expenses and is exempt from taxation — irrespective of whether the actual expenses (electricity, repairs, insurance, etc.) are higher or lower.</li><li>It is under the same Section that interest paid on loans can also be claimed as income tax deductions.</li></ul>Let’s do some hypothetical number-crunching and compare a regular rental property in an SPV/holding company and a property that has been purchased and structured as per hBits’ formula. (In both cases, let’s assume property tax has already been paid).Regular rental propertyRental income or Net Annual Value: ₹100Standard deduction at 30%: ₹30Taxable rental income: ₹100 – ₹30 = ₹70Rental income tax: (Depends on your income tax slab, let’s assume 30%) 30% of ₹70 = ₹21Fractional property with hBits’ structuring formulaRental income: ₹100Standard deduction: ₹30Deduction of interest on borrowed capital (paid out as interest on CCD): ₹70Taxable rental income: ₹100 – (₹30 + ₹70) = ₹0Conclusion: As readers will no doubt have noted, hBits’ structuring formula allows the SPV or the holding company to pass on the full income and maximum benefits to the investors. Moreover, this is not the only way hBits helps investors to save on tax, so let’s move on to capital gains next.iii) Capital gains tax: This is a tax on the growth in value of the investment, or quite simply put, it is any profit or gain that arises when the asset is sold at a higher price than when it was bought. It is classified as Long-Term Capital Gains (LTCG) if the property is held for 36 months or more (24 months for shares, 36 months for CCD). If the holding period is less, it is termed Short-Term Capital Gains (STCG).hBits holds all assets under its management for 4-6 years before selling them. This is done primarily to achieve a good appreciation in the property value and has an added advantage of capital gains being taxed as long-term gains which attract lower tax rates (20%) and also allow for indexation for computing the cost of acquisition.<h4 style="margin-left:0px;">&nbsp;</h4><h4 style="margin-left:0px;">Illustration of long-term capital gains tax with indexation*</h4>Property X was purchased on December 1, 2016, for ₹100 and sold on December 1, 2019, for ₹150. A layperson might assume that tax will be calculated on the gross profit or ₹50. However, the following method is more accurate and tax-efficient:Purchase price: ₹100Indexed cost of acquisition: ₹100 (purchase price) x 289 (CII for 2019-20) = ₹110264 (CII for 2016-17)Selling price: ₹150Net gain: ₹150 – ₹110 = ₹40LTCG Tax: 20% of ₹40 = ₹8Effective tax rate: ₹8 x 100 = 16%₹50<h4 style="margin-left:0px;">&nbsp;</h4><h4 style="margin-left:0px;">Illustration of short-term capital gains tax*</h4>Property Z was purchased on December 1, 2016, for ₹100 and sold on December 1, 2019, for ₹150.Purchase price: ₹100Selling price: ₹150Net gain: ₹50STCG Tax: (As per applicable slab rates, let’s assume 30%) 30% of ₹50 = ₹15Effective tax rate: ₹15 x 100 ₹50* For simplicity the tax calculations are done at the base rate, ignoring applicable surcharge and cess.Conclusion: It is immediately clear that there is great benefit in holding the asset till investors can enjoy the benefits of long-term capital gains, as it can mean paying nearly half the tax they would have paid for short-term gains.Bonus pro tip: To optimize your capital gains, even more, it is best to re-invest your profits in real estate again, or in bonds or similar tax-friendly assets.<h4 style="margin-left:0px;">&nbsp;</h4><h4 style="margin-left:0px;">Freedom and security</h4>As explained above, hBits has strategized and calculated how best the investors can maximize their returns and minimize tax. These measures include virtual pass-through of rental yield with any tax in the hands of SPV, holding the asset for long-term gains, as well as endeavor to sell the entire SPV, rather than selling merely the property (this is also more tax-effective).That said, hBits also value the investors’ need for liquidity and ease of exit. Keeping this in mind, hBits has structured the investment in a manner (shares &amp; CC) that allows individual investors to cash out whenever they want by selling shares &amp; CCD of the SPV — even if it is before the sale of the asset or entire SPV.* The above taxation rates and calculations apply only to resident investors; non-resident investors can contact hBits to find out more about tax rates applicable to them.

Join the Commercial Property Investment Trend: Split risk and benefit from Grade A properties with fractional ownership at a fraction of the cost. Visit us now!

Optimize Your Financial Outcome with hBits

First of all, what is fractional ownership of property? What this means is the hBits brings together a group of investors who can each invest ₹25 lakh onwards and jointly purchase a premium commercial property.

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</script></div>Fractional real estate investing, or Fractional ownership, is the new Buzzword in the Indian real estate market, democratizing the way real estate investment&nbsp; is perceived in India.&nbsp;In the post-coronavirus world, investors remain on the lookout for different avenues of investment. Apart from the traditional instruments like Gold, Fixed Deposits and government bonds, real estate remains a consistent favorite. Having proven to be a successful investment model in India, people are always looking out for real estate assets, especially commercial assets owing to better cash flows. However, unlike previous generations who were able to invest considerable savings in Gold and Land, today’s urbanites have been limited to investing in residential apartments or small plots.&nbsp;Investing in quality Grade A real estate in India- so far - has required considerable money, connections and comprehensive knowledge, keeping the options open only to high net worth and ultra high net worth individuals. Not everyone has the cash on hand to buy a home or office, renovate or remodel, and then either rent it out or flip it.&nbsp;The commercial real estate space especially, has been a playground for large corporate entities and wealthy investors only- The high prices and complex investment process keeps retail investors from investing in big-ticket commercial real estate assets. Retail investors and middle-class investors were both hesitant and incapable of investing in large commercial projects.&nbsp;&nbsp;For these investors, the only way to get into this market is through fractional real estate investing.&nbsp;With Fractional Ownership, retail investors can now invest small amounts to buy fractions of otherwise unaffordable yet highly profitable real estate.Fractional property investment has emerged as a promising concept, owing to its low risk and high return properties serving as a boon for retail investors to make profitable investments that would provide long term capital appreciation as well as stable monthly return. Although Fractional Ownership of real estate has been in trend in the USA and Europe for a long time, this is picking up pace in India. The fractional ownership market in India is expected to grow 16% year-on-year and reach $ 3 Bn in the next few years.&nbsp;Let us go into the finer details of this growing trend.&nbsp;<h2>What is Fractional ownership in real estate?&nbsp;</h2><img class="image_resized" style="width:85.71%;" src="https://hbits-aws-aps1-prod-s3-hbitsv2-strapi-uploads.s3.ap-south-1.amazonaws.com/image_de8ee2f755.png" alt="image.png" srcset="https://hbits-aws-aps1-prod-s3-hbitsv2-strapi-uploads.s3.ap-south-1.amazonaws.com/thumbnail_image_de8ee2f755.png 235w,https://hbits-aws-aps1-prod-s3-hbitsv2-strapi-uploads.s3.ap-south-1.amazonaws.com/small_image_de8ee2f755.png 500w," sizes="100vw"><a href="https://hbits.co/">Fractional Real Estate Investment</a> is essentially partial Ownership in big-ticket size properties, jointly operated by a group of investors and pooled investment. These large properties do not otherwise fall under the investment potential of retail investors. The real estate management company invites retail inventors to invest a certain amount and take benefit from the high yields and capital appreciation&nbsp; Fractional ownership in real estate gives you a stake in the real estate and makes you a part-owner. Let us understand this with an example. An asset management firm is managing a Grade A commercial property worth Rs 20 crore, leased to a large MNC. They invite 100 retail investors to invest Rs 20 lakh each and earn fixed monthly returns as well as capital appreciation at the time of exit, in proportion to their investment. This is fractional ownership.&nbsp;The asset manager lists a range of such properties, as potential investments, on a tech enabled platform. The minimum ticket size for each investment is decided, and investors are invited to buy portions of the asset as per their capacity and risk appetite.&nbsp;<h2>Benefits of fractional real estate investment</h2>Despite being a comparatively new investment class in India, fractional ownership is a growth-oriented domain that is gaining traction and popularity. Some of the key benefits of fractional investment as an investment class are as follows:&nbsp;&nbsp;<h3>1) Lower barriers to entry</h3>Grade A real estate investment was previously an option only for the wealthy. By splitting the cost of an asset among various investors, fractional real estate investment significantly reduces the barriers to entry, allowing retail investors with a few lakhs to invest to gain access to high quality real estate.&nbsp;<h3>2) Reduced financial risk:&nbsp;</h3>By owning a smaller percentage of the property, fractional property investment reduces the financial risk for individual investors. If the property incurs losses, those losses are shared proportionally amongst the owners, minimizing the impact on any one investor&nbsp;<h3>3) Increased Liquidity:&nbsp;</h3>Fractional ownership in commercial real estate can provide increased liquidity as it can be easier to sell a fraction of a property than to sell an entire property. This allows investors to more easily exit their investment if needed.&nbsp;&nbsp;<h3>4) Professional property management:&nbsp;</h3>By pooling resources, fractional ownership can provide access to professional property management services, which can help reduce management costs and increase the overall value of the property<h3> 5) Diversification of Investments:&nbsp;</h3>Fractional ownership can provide investors with the opportunity to diversify their investments, spreading risk across multiple properties and reducing concentration risk. Investors can make multiple small investment across different types of This can help to mitigate the potential losses that might result from a downturn in any one particular sector or region of the market &nbsp;<h2>Drawbacks Of Fractional Property Investment&nbsp;</h2>Like any investment,&nbsp;<a href="https://hbits.co/properties">fractional property investment</a> has its downsides too.&nbsp;<h3>Harder to finance/ raise debt</h3>Financing an asset with many investors isn’t the same as financing a single-family home. Mortgages are usually made for one or two people, not many. Fractional investment is easiest when you buy the property outright in cash, but may present complications for people trying to rasie debt to invest in real estate.&nbsp;<h3>Potentially unknown co-owners</h3>If you’re using a fractional real estate company to facilitate the purchase and manage the property, you’re probably getting into it with many buyers who you don’t know. That could create headaches down the road if disputes arise.&nbsp;<h3>Understanding the Cost Structure</h3>If you’re having a manager operate the fractional property, you’ll want to understand how much you’re paying and what potential fees you’ll be liable for. Even if this is more of a financial transaction and you own shares, you’ll need to understand what the fee structure is. It’s not unusual for an asset manager to take a 1 percent cut on the sale or disposition of a property, and you may also be charged for ongoing management of those assets, depending on the arrangement.It’s vital that you understand the fees and what you’ll have to pay. And while you’re at it, you’ll want to investigate how you can exit the investment and the fees associated with that.&nbsp;<h3>Less control</h3>One of the perks of buying your own property is deciding what is best for yourself. When you share that property with other people, you lose out on some of that control. The more shareholders or owners are in the mix, the less say you get in how a property is managed.&nbsp;<h2>Who should invest in Fractional Property?</h2>Fractional real estate investment is best for:<ul><li>Those looking to break into real estate investing: If you want to get your foot in the door with a little bit of cash and not a ton of experience, fractional property investment might be a good idea.</li><li>Buyers looking for a non-primary property: Buying a home with other people means you split ownership. Only go this route if you don’t plan to live in the home.</li><li>Investors who have done their homework: Scour different fractional real estate investing sites to see which ones have insight into the neighborhoods and locations you’re exploring. Some of these fractional real estate startups are based in specific cities or regions, which might limit where you can buy. Even if there’s a lower barrier to entry, you can still do your due diligence and find the best company to go with before you buy. In some cases, you might invest fractionally without the help of a company.</li></ul>&nbsp;<h2>Bottom line</h2>Fractional real estate investing is one way to boost your passive income and break into real estate investing. It’s a great option for investors with limited funds who don’t want the burden of owning and maintaining an extra property, but it does come with work. Before you fully dive in, calculate the possible returns to make sure you’re maximizing your investment potential. &nbsp;<h2>Frequently Asked Questions</h2>&nbsp;<h3>Q1. Is fractional ownership legal in India?</h3>Ans. Fractional ownership is legal in India. Real estate developers offer it, allowing multiple investors to own a portion of a property. It enables investment without bearing the full cost and offers flexibility and liquidity.<h3> &nbsp;Q2. How does fractional ownership in real estate work?</h3>Ans. In Fractional ownership multiple investors pool their funds to purchase a property. Each investor owns a percentage share of the fractional property proportional to their contribution.<h3> &nbsp;Q3. Is fractional investment worth it?</h3>Ans. Fractional investment can be worth it for investors looking to diversify their portfolio and invest in real estate without committing a significant amount of capital.<h3> &nbsp;Q4. Is fractional real estate investing risky?</h3>Ans. Fractional real estate investing can carry risks, just like any other investment. It is essential to do your research and understand the potential risks involved before investing in fractional real estate.

Benefits of fractional real estate investing - Learn how fractional ownership in real estate can make fractional property investment more accessible.

Explore The Benefits Of Fractional Real Estate Investing

Fractional real estate investing, or Fractional ownership, is the new Buzzword in the Indian real estate market, democratizing the way real estate investment&nbsp; is perceived in India.

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Benefits of Fractional Real Estate Investing in 2023

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Missing the ‘Real-Estate’ Boom? Here’s a smart way to ride it.&nbsp;The pandemic brought about lockdowns and central governments across nations loosened their purse strings. As more money crept into the system, interest rates for loans on real estate went to record lows. As India successfully embarked on one of the world’s largest ‘vaccination drives’ and the threat of the pandemic began to diminish, real estate across cities saw a major surge.&nbsp;The Top seven Indian property markets recorded over 124% year-on-year jump in housing sales at 32,358 apartments as per the data shown by JLL India. Knight Frank highlighted a 92% rise in housing sales across 8 cities at over 64,010 units. Commercial real estate has matched the pace too. India’s office transactions grew to 12.5 million sq. ft in Q3 of FY21-22 which is up 168% year-on-year. This is despite the country having just undergone a very severe second wave of COVID-19 in the first quarter of the year. Around 11.9 million sq. ft of new office space was completed and delivered during the quarter. Q4 is expected to be as strong if not more in terms of demand for office space.&nbsp;Did you miss the bus?When the sparkling growth of an asset class comes along, an investor tends to pay attention. Many are feeling a sense of having missed the bus. The reasons could be that the real estate they selected or the ones that suit them may be out of budget even with the loans they are eligible for.&nbsp;While we do not want to delve into the reasons as it is best known to the reader/ investor, we wish to highlight an asset class that is increasingly becoming popular. It enables you to take exposure in real estate without the hassles of having to read through documents, scout for buyers, manage tenants, maintain, and repair the property, etc.It helps you to earn a rental yield of around 8-10% and a capital appreciation of around 5-10% per annum in a hassle-free manner while ensuring that tenants are highly reputed and financially stable companies.&nbsp;Interested to know more?&nbsp;Fractional Ownership of Commercial Real Estate – A well-balanced asset classWhat is fractional ownership of commercial real estate? To explain it in layman's terms, it pools investment from many investors into premium Grade A commercial real estate and enables all investors to partake in a share of profits in terms of both rental yields and capital appreciation. The investors are allotted ‘fractions’ basis their investment and they can sell the fraction later.&nbsp;The minimum investment to own a ‘fraction’ is INR 25 Lakhs. In a city like Mumbai, even a one-bedroom residential property will block almost twice the amount for you. Moreover, the fractions are derived from grade A commercial property that is managed by professional companies. With such reputed tenants and professional management of the properties, we can assume a 5-10% capital appreciation and an 8-10% rental yield annually. As per these metrics, the sum of the rental yield and capital appreciation would give you steady long-term returns at a target IRR of 13-20% over a period of five years. This is a much more lucrative investment option when compared to ‘Fixed Deposit’ which is a minimum-risk asset class with an interest rate of about 7% per annum.&nbsp;Is there any risk that I should be aware of?There are almost no asset classes that yield great returns without having an element of risk. The ability of the investor to understand the risk and know how to mitigate it is what makes an asset class attractive.&nbsp;With fractional ownership of the pre-leased commercial real estate, most of the risks are covered. Here’s a gist of how the perceived risks is addressed: -&nbsp;<ol><li>Extensive Due Diligence property:The Grade A pre-leased commercial real estate is vetted and validated across all aspects by professional management. The ‘fractions’ that you invest in would have undergone significant due diligence across every aspect. It provides a great cushion of comfort for the investors and gives them comfort against any perceived risk with regard to the property.</li><li>Creditworthy and Reputed Tenants:The tenant at the other end of the fraction that you own is a reputed company with robust financials. They enter into lock-in agreements of three years or more and hence you do not have to scout for a tenant every year unlike in residential real estate.&nbsp;</li><li>Professional Management of Operations:The pre-leased commercial real estate is managed by a professional company that takes care of rent collection, ancillary services, operations, and upkeep of the property, etc. In essence, your ‘fraction’ is also well managed and hence you needn’t worry about rental yield. You also needn’t worry about the next buyer because the company managing the real estate will take care of it.&nbsp;</li><li>Capital Appreciation:&nbsp;Due to extensive due diligence, the location of the property chosen is such that it lies in an area where there is a huge demand for pre-leased commercial real estate and multiple reputed companies are always on the lookout for such spaces. Hence, the minimum capital appreciation of 5% per annum has been factored in and there could be instances when it can be more than the percentage of appreciation assumed.&nbsp;</li><li>Computation and Collection of Returns:With neat dashboards, the company managing your fractions can provide you with the latest updates on the status of your fraction and the value that it could be returning at that point in time. You needn’t worry about the computation of the returns or collection of the same when you sell your fractions. Everything is managed through digital interfaces and the transactions and payments are seamless.&nbsp;</li></ol>Wrapping upFractional Ownership is a great way to ride the real estate boom with almost all risk factors addressed. It can help you to sleep peacefully while your fractions make a good return over time. As per many reports on the state of the economy and real estate, the commercial and residential real estate boom is not going to fade away soon, and hence the time is ripe and right for investing in fractional ownership of grade A pre-leased commercial real estate.&nbsp;

Dive into the real estate market with ease through fractional investing with hBits. Don't miss out on this exciting opportunity! Check our blog to learn more.

Fractional Investing: The Key to Real Estate Investment

The pandemic brought about lockdowns and central governments across nations loosened their purse strings. As more money crept into the system, interest rates for loans on real estate went to record lows. As India successfully embarked on the one of the world’s largest ‘vaccination drives’ and the&nbsp;

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Before we begin, let us assure you. This article is not about one of those financial schemes (or scams) that you keep reading about. This is about safely investing in a very legitimate and high-quality asset with assured returns over time.<h4 style="margin-left:0px;">&nbsp;</h4><h4 style="margin-left:0px;">What are we talking about?</h4>We are talking about ‘Fractional Ownership’. For the uninitiated, it divides a very high-value tangible asset such as a premium commercial property into small ‘fractions’. These fractions become affordable for an individual investor who has comparatively lesser cash to invest upfront. While the ticket size of the investment and the associated risk is smaller, the potential for earning over five years or more is very high.<h4 style="margin-left:0px;">&nbsp;</h4><h4 style="margin-left:0px;">Sounds interesting, let me know more.</h4>Imagine a premium commercial real estate that is occupied by some of the most renowned companies. The ownership of this space would be beyond the grasp of an individual investor. Does this mean they shouldn’t own at least a part of it? That’s the exact lacunae that ‘Fractional Ownership’ intends to fill.<h4 style="margin-left:0px;">&nbsp;</h4><h4 style="margin-left:0px;">The mathematics behind Fractional Ownership</h4>Let’s say you invest INR 25 Lakhs to purchase the lowest-denominated fraction of this property. The investment is made into a property that is professionally managed hence the rental income is assured from day one. Let us say you earn a nominal 8-10% per year on your investment as rental income. So, you will end up earning Rs. 2 Lakhs a year which will become Rs. 10 Lakhs at the end of five years at a nominal annual rental income of 8%.Let us take a very safe assumption that the value of the property and correspondingly, your ‘fraction’ will appreciate at 5-10% per annum. The value of your fraction itself will end up at around Rs. 35.6 Lakhs if we consider an appreciation of 7.32%.At the very conservative rate of return and value appreciation that we have considered above, your investment of Rs. 25 Lakhs will become more than Rs. 45 Lakhs (Rs. 45.6 Lakhs to be precise at an IRR of 13-20%) at the end of five years.&nbsp;<h4 style="margin-left:0px;">Would there be any risk?</h4>While we must understand that no return comes without risk, it is wise to ensure steps to mitigate risks. That’s exactly what the ‘Fractional Ownership model incorporates and enables you to enjoy the following benefits:<ol><li>No scouting for the tenant, zero opportunity loss: You needn’t scout for a tenant and are unlikely to have an opportunity lost because a tenant vacates abruptly. The tenants are scouted by the firm managing or owning the premium real estate.</li></ol><ol style="list-style-type:lower-alpha;"><li>Now, compare this to your own house if you wish to rent the same. Firstly, you must find a tenant. If your deal with the tenant gets delayed or doesn’t work out, you lose monthly income while your expense (EMIs towards the house) does not cease.</li><li>Assured Rented Income: Your rented income is assured as the tenants normally have a lock-in period of 3-5 years and rental payments are secured as per the clauses in their leave and license agreements. The security deposits of up to 6 months provide an additional cushion in case a tenant makes an early or abrupt exit.</li></ol>With your own house, the only assurance of a rented income is if you can find a tenant on time. The allied costs such as painting, repairs, etc. are also borne by you which eats into your rented income and actual returns.<ol><li>Additional Earnings from Ancillary Income: The common services such as cafeteria, concierge, technology support, etc. also yield income for the owners of the property. This may be passed on to the owners of the fractions over time.</li><li>Such complementary earnings would never be possible when you rent your own house. Would it?</li><li>Appreciation of rates for commercial property: The property may be valued higher within five years and the value of the fraction that you own could become much higher.</li><li>While there is no denying that your own house may also see an increase in value over time, your EMIs, maintenance of your house, and the task of realizing the capital appreciation (if at all) by engaging a broker will reduce your real returns from your own home.</li></ol>While we don’t intend to directly compare buying a home with ‘fractional ownership, we wanted to give you a perspective of how fruitful the idea of owning ‘fractions’ would be – not only in terms of monetary gains but also the hassle-free and low-risk nature of such earnings.Are you willing to explore this financial instrument?Take the plunge today.&nbsp;<a href="https://hbits.co/how-it-works">Invest in your first fraction right away</a>.

Maximize returns with hBits! Invest 25 Lakhs now and receive 45 Lakhs in 5 years. Discover the potential of smart investing on the hBits Blog.

Invest 25 Lakhs and receive 45 Lakhs in five years

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Discover best ways to invest in real estate in India with hBits. Get access to expert guidance & comprehensive resources for a successful investment journey.

Best Ways to buy Real Estate in India

For decades now, India has had a steady obsession with owning real estate – a fact that was quantified by the country’s central bank in a report titled Indian Household Finance. In the report, the Reserve Bank of India stated that an average Indian household holds a staggering 84% of its wealth in real estate, whereas only 5% of its income was tied to financial assets such as stocks, bonds, and deposits. The unwavering faith in realty is not surprising mainly owing to two reasons: real estate is a tangible asset and not merely a piece of paper, and secondly, most Indians have previously witnessed healthy appreciation in property prices in the long run.

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Preleased Commercial Real estate investments are an attractive idea for investors, especially the ones with a sizable sum of money to invest. It enables investors to not only enjoy appreciation of the asset but also a stable rental yield. Based on the location of the asset, the stature of its tenants and multi-year agreements with lock-in clauses, a commercial real estate investment can yield decent returns.&nbsp;However, commercial real estate requires you to spend a considerable amount of time before you invest as you must factor in various things. Here’s a quick list: -&nbsp;<ul><li>The potential of the market: -&nbsp;If you are considering a commercial real-estate asset for investment, you must first understand the potential of the market and the ecosystem. If the city, the area, etc. is a buzzing business hub and always in demand with global multinationals or reputed local companies, it may be considered for investment. The reason being that such tenants are unlikely to default on their rentals and are the best bets for a multi-year deal with lock-in agreements. One must also conduct enough due diligence on the identified asset and check if there are any legal issues, history of conflict between tenant and owners, the ratio of occupancy always, any rent defaults, etc. as every little piece of information on the property allows one to make the right investment decision.</li><li>Nature of the tenant’s Business: -&nbsp;You must know the nature of the tenant’s business over a period. You may also want to know the inherent risks in such models. For example: If the tenants run businesses that might be disrupted soon due to online businesses, it may not be too wise to consider the same as it could have a serious impact on rental yield.&nbsp;</li><li>Management of the tenant’s businesses: -&nbsp;It may be wise to know more about the tenants and the management. If the tenants are companies known for good governance and top-quality management team, it might be a good idea to consider real estate that hosts such companies.&nbsp;</li><li>Know the permissions required and the time taken to get them: -&nbsp;A commercial real estate asset may need permissions and clearances from multiple administrative authorities of the city before you can make an investment. It would be prudent to understand or even create a list of all such permissions or approvals and build a tentative list of the same with an approximate duration of time taken for such permissions. Once that is done, it can give you a fair idea to gauge if you have the time and patience to make such an investment.&nbsp;</li><li>Understanding Key Working and Employment Trends: -&nbsp;Let’s imagine that&nbsp;the commercial real estate that you are considering hosts technology firms or e-commerce firms which may not necessarily need such office space and may adopt remote or hybrid work models eventually. You must factor in such risks while considering a commercial real estate investment. One must figure out an ideal mix of tenants as technology companies are known to be stronger on cash flows and reserves and are hence less likely to default on payments. On the other hand, there is always a risk of continuity as they may go hybrid or even start operating out of tier 2 and tier 3 cities as a cost-effective measure to host themselves closer to the human capital in such cities.&nbsp;</li><li>Look for creditworthy partners: -&nbsp;Commercial real estate comes with a significant upfront initial investment. You must look for trusted sources of capital and partners with good pedigree and reputation. They enable you to make a great investment by bringing in the finances. However, what is more, precious is their experience, intelligence, and business acumen.&nbsp;</li></ul>&nbsp;<h4 style="margin-left:0px;">What’s in it for an individual investor?</h4>One might think that investing in Grade A commercial real estate is way beyond reach just because it requires substantial due diligence, large capital investment, market analysis, etc. That's where Fractional Ownership comes in and makes this asset class accessible for the individual investor.&nbsp;&nbsp;<h4 style="margin-left:0px;">What’s Fractional Ownership?</h4>Fractional Ownership enables you to invest in commercial real estate using a relatively smaller sum of money and buying a small part or ‘fraction’ of the desired commercial real estate. For an investment of as low as INR 25 Lakhs (that’s lesser than the cost of a one-bedroom house in Mumbai), you could own a fraction of a grade-A premium preleased commercial real estate.&nbsp;<h4 style="margin-left:0px;">Here’s the most interesting part</h4>All you need to do is bring in your investment. The 6 factors mentioned above will be worked on by a Fractional Ownership platform like hBits.hBits can guide you by offering all the information you need including market research and due diligence, for you to take an informed decision.Once you invest, there are no further hassles. The platform will manage the formalities, documentation, rent collection, maintenance, and all other administrative tasks while taking care of its upkeep. They will ensure that you get your monthly rental credit on time and as projected. In case you want to sell your fraction then the platform also takes care of that by ensuring you get a fair price considering capital appreciation over time.You do not even have to scout for tenants, work on agreements or documentation with respect to the property and tenant onboarding, and so on.&nbsp;&nbsp;<h4 style="margin-left:0px;">Wrapping up</h4>Fractional ownership in grade A Commercial Real Estate is one of the best ways to invest in quality real estate and let your money grow. It is one of the few avenues where you enjoy the returns while the entire work, management of your funds, etc. is taken care of by the Fractional Ownership Platform. With real-time dashboards, they can also assure transparency of the highest order. All you need to do is log in to a web-based interface and you will be able to check the estimated returns at any given point in time.&nbsp;Isn’t that a great investment option? Why delay, just&nbsp;<a href="https://hbits.co/">click</a>&nbsp;here to get going .

Unlock the potential of preleased commercial property investing with expert guidance from hBits. Discover the top 6 factors to consider for success. Read on !

6 factors to look while investing in a commercial property

Preleased Commercial Real estate investments are an attractive idea for investors, especially the ones with a sizable sum of money to invest. It enables investors to not only enjoy appreciation of the asset but also a stable rental yield. Based on the location of the asset, the stature of its tenants and multi..

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</script></div>The Commercial real estate sector in India was significantly affected by the Covid-19 outbreak. Property transactions came to a near-halt when the nation went into a complete lockdown during both waves. Net absorption of Grade A office stock in the top 7 cities in India which was at a record high of 46.5 million sq.ft. in 2019, stood at 25.6 million sq.ft. in 2020 and 26.88 million sq.ft in 2021, a decline in demand by&nbsp; 45% and 42% in 2020 and 2021 respectively.<h2>&nbsp;</h2><h2>2020-2021 Fallout in Commercial Real Estate Property Transactions</h2>In the wake of uncertainty, delayed decision-making and reduction in capital expenditures led to the deferment of deals by three to five months affecting the sectoral growth rate. Many new commercial real estate property deals were stuck with key decision-makers unable to conduct any business owing to travel restrictions. Simultaneously, numerous parties postponed transactions and decided to adopt a wait-and-watch policy. Reports also suggest that the number of enquiries and site visits declined significantly. Only pre leased commercial property deals saw some traction on account of being ratified at an earlier date, and their relatively low-risk nature.&nbsp;It was not however all doom and gloom in the commercial real estate investment sector. There were some lucrative opportunities that arose despite the Pandemic, or one could say as a result of it. For instance, the demand for co-working spaces rose, despite demand for all other asset classes declining by almost 50%, as smaller enterprises began to seek more flexible and temporary arrangements rather than taking up a long term lease in a traditional office space, and larger enterprises that shut down their offices of operation owing to downsizing requirements or hybrid work policies, began taking up flexible spaces&nbsp;&nbsp;Therefore, while the commercial real estate industry in India faced many challenges due to Covid-19, there were also opportunities for those willing to adapt and innovate.&nbsp;&nbsp;&nbsp;&nbsp;<h2>&nbsp;</h2><h2>Post-Pandemic Bounce-back in Commercial Real Estate Investment</h2>The Commercial Real Estate sector has seen major recovery post the Pandemic and is expected to bounce-back and surpass the 2019 record highs in the next few quarters.&nbsp;On the path of recovery from these volatile times, people tend to look for options with a higher degree of safety and stability like bonds and commercial real estate investment. The first Covid free year- 2022- was a testament to this fact. The commercial real estate sector has shown robust recovery in 2022, with both the demand and the supply of Grade A commercial real estate seemingly returning to the 2019 record highs, and are poised to set a new record high in 2023. Net absorption figures stood at 38.26 million sq.ft. in 2022, a 42% increase from 2021, and almost in line with the record highs of 46.5 million sq.ft. in 2019. Gross leasing activity for the calendar year 2022 was recorded at 49.8 mn sq ft, higher by 88% from 2021, and hitting a three-year high as a COVID-free year. Greater certainty in the business environment in 2022 has therefore supported on-ground real estate activity, and the bounce back is expected to continue until 2024.&nbsp;<h2>&nbsp;</h2><h2>Pre leased Commercial Property Is The Future</h2>&nbsp;<img class="image_resized" style="width:87.54%;" src="https://hbits-aws-aps1-prod-s3-hbitsv2-strapi-uploads.s3.ap-south-1.amazonaws.com/Final_Building_Image_0377144570.png" alt="pre leased commercial property" srcset="https://hbits-aws-aps1-prod-s3-hbitsv2-strapi-uploads.s3.ap-south-1.amazonaws.com/thumbnail_Final_Building_Image_0377144570.png 245w,https://hbits-aws-aps1-prod-s3-hbitsv2-strapi-uploads.s3.ap-south-1.amazonaws.com/small_Final_Building_Image_0377144570.png 500w," sizes="100vw">&nbsp;When it comes to&nbsp;<a href="https://hbits.co/">commercial real estate investment</a>, investors should conduct in-depth due diligence along various parameters to ensure turbulent times like these have little impact on your portfolio properties. With investors’ risk appetites at their all-time low as a result of the Pandemic-induced uncertainty, properties that are under construction and already going through a liquidity crunch due to the economic slowdown are expected to be the worst hit as work will be stalled and cash flow would be diminished, and investors are now unwilling to take any uncertainty risk as a consequence of the current economic environment. Pre leased commercial properties therefore look even more attractive today than they did pre-pandemic as they bear the least cash-flow risk. The pre-committed rentals will be paid out as per leave and license agreements signed by tenants, providing steady cash flows in an otherwise unsteady real estate market. Also, premium commercial properties have an added advantage as tenants are typically MNCs or large corporates with strong business fundamentals and sustained cash flows to service the rentals.<h2>&nbsp;</h2><h2>Commercial Property Rental Yields Remain Stable</h2>&nbsp;<img class="image_resized" style="width:88.94%;" src="https://hbits-aws-aps1-prod-s3-hbitsv2-strapi-uploads.s3.ap-south-1.amazonaws.com/New_Project_22_76763b3fe3.png" alt="commercial property rental yield in india" srcset="https://hbits-aws-aps1-prod-s3-hbitsv2-strapi-uploads.s3.ap-south-1.amazonaws.com/thumbnail_New_Project_22_76763b3fe3.png 245w,https://hbits-aws-aps1-prod-s3-hbitsv2-strapi-uploads.s3.ap-south-1.amazonaws.com/small_New_Project_22_76763b3fe3.png 500w," sizes="100vw">&nbsp;Owing to the factors mentioned above, commercial property rental yield is still in the range of 7-9% on Grade A commercial assets, and the performance is expected to sustain in the near term. Customers looking for a safe haven for their liquidity should keep an eye for pre leased commercial property in the market. Here rental income is assured as the properties have already been rented out with strong rental agreements in place. The deferment of deals and slowing of business cycles have little effect on them. Pre leased properties will bring guaranteed returns in the near to medium term countervailing the volatility in the stock markets and adding some solidity to your portfolio.However, it is important to choose well if you are planning an exposure to&nbsp;<a href="https://hbits.co/properties">pre leased commercial property</a>. As the location is a critical factor in the commercial real estate investment, be very sure that the long-term forecast for the location is positive. You should also pay attention to things like the quality of construction, the cost of maintenance, and the credibility of your property manager. Finally, your aim should be to choose a property with good-quality tenants demonstrating sound financial health and a zero-default track record to ensure good commercial rental yield in India.Owing to the factors outlined, customers holding liquidity should look for safer havens like pre-leased commercial property or government bonds to earn stable and healthy monthly income from commercial real estate investments.<h2>&nbsp;</h2><h2>Frequently Asked Questions</h2><h2>&nbsp;</h2><h2>Q1.&nbsp;What is an example of commercial real estate property?</h2>Ans. An example of commercial real estate property could be an office building, a retail shop or mall, or even a co-working space.<h3>&nbsp;</h3><h3>Q2. Why commercial real estate property is a good investment?</h3>Ans. Commercial real estate property is a good investment because it typically offers higher returns compared to residential property, as well as predictable and long-term cash flow.<h3>&nbsp;</h3><h3>Q3. Is it safe to invest in a pre leased commercial property?</h3>Ans. It depends on various factors such as the location, lease terms, property condition, and tenant's credibility. It is recommended to conduct proper due diligence and seek expert advice before deciding to invest in a pre leased commercial property.<h3>&nbsp;</h3><h3>Q4. Can we take a loan on a pre leased commercial property?</h3>Ans. Yes, it is possible to take a loan on a pre leased commercial property. However, the loan amount and terms may depend on factors such as the property's value, lease terms, and lender policies.<h3>&nbsp;</h3><h3>Q5.&nbsp;What type of commercial real estate investment is the most profitable?</h3>Ans. It is difficult to determine which type of commercial real estate investment is the most profitable, as it depends on various factors such as location, property condition, tenant demand,&nbsp;market trends and economic conditions. However, some examples of potentially profitable commercial real estate include pre leased commercial real estate, tech-focused office spaces, affordable and well-located retail storefronts, and mixed-use developments that combine residential, commercial and/or office spaces to serve diverse needs.<h3>&nbsp;</h3><h3>Q6.What commercial real estate investment has the most risk post Covid?</h3>Ans. Hotel and hospitality-focused commercial real estate investments tend to pose higher risks due to their dependence on tourism, travel trends and economic conditions. Other high-risk commercial real estate investments include speculative developments, such as new construction projects in untested markets, and distressed properties that require significant renovation or redevelopment.<h3>&nbsp;</h3><h3>Q7. What is a good commercial rental yield in India?</h3>Ans. A good commercial property rental yield can vary widely depending on the location, type of property, and local market conditions. However, generally, a rental yield of 7 to 9% is considered good for commercial property investments. It is important to note that rental yield alone does not paint the complete picture of a commercial property's profitability, as factors such as maintenance costs, property taxes and other expenses should also be taken into account.

Discover the impact of Covid-19 on commercial real estate investment and commercial rental yield in India. Learn how commercial property investment is affected.

Impact Of Covid-19 On Commercial Real Estate Investment

The Commercial real estate sector in India was significantly affected by the Covid-19 outbreak. Property transactions came to a near-halt when the nation went into a complete lockdown during both waves.&nbsp;

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