Fractional Ownership
Investing ₹25 lakh in fractional ownership of commercial real estate across major Indian cities can yield varying returns based on rental yields and property appreciation rates. Here's a comparative analysis for Bangalore, Chennai, Mumbai, Delhi, Kolkata, Pune, and Hyderabad over a 10-year period:
1. Rental Yields and Property Appreciation Rates:
Bangalore:
Rental Yield: Approximately 7.75% per annum.
Property Appreciation: Around 8% per annum.
Chennai:
Rental Yield: Approximately 5.06% per annum.
Property Appreciation: Around 6% per annum.
Mumbai:
Rental Yield: Approximately 7.75% per annum.
Property Appreciation: Around 7% per annum.
Delhi:
Rental Yield: Approximately 8% per annum.
Property Appreciation: Around 6% per annum.
Kolkata:
Rental Yield: Approximately 5.03% per annum.
Property Appreciation: Around 5% per annum.
Pune:
Rental Yield: Approximately 4.35% per annum.
Property Appreciation: Around 6% per annum.
Hyderabad:
Rental Yield: Approximately 3.35% per annum.
Property Appreciation: Around 7% per annum.
2. Projected Returns Over 10 Years:
Assuming an initial investment of ₹25 lakh, the projected returns from rental income and property appreciation over 10 years are as follows:
Bangalore:
Total Rental Income: ₹25,00,000 × 7.75% × 10 = ₹19,37,500
Appreciated Property Value: ₹25,00,000 × (1 + 8%)^10 ≈ ₹53,68,000
Total Value: ₹19,37,500 + ₹53,68,000 = ₹73,05,500
Chennai:
Total Rental Income: ₹25,00,000 × 5.06% × 10 = ₹12,65,000
Appreciated Property Value: ₹25,00,000 × (1 + 6%)^10 ≈ ₹44,77,000
Total Value: ₹12,65,000 + ₹44,77,000 = ₹57,42,000
Mumbai:
Total Rental Income: ₹25,00,000 × 7.75% × 10 = ₹19,37,500
Appreciated Property Value: ₹25,00,000 × (1 + 7%)^10 ≈ ₹49,18,000
Total Value: ₹19,37,500 + ₹49,18,000 = ₹68,55,500
Delhi:
Total Rental Income: ₹25,00,000 × 8% × 10 = ₹20,00,000
Appreciated Property Value: ₹25,00,000 × (1 + 6%)^10 ≈ ₹44,77,000
Total Value: ₹20,00,000 + ₹44,77,000 = ₹64,77,000
Kolkata:
Total Rental Income: ₹25,00,000 × 5.03% × 10 = ₹12,57,500
Appreciated Property Value: ₹25,00,000 × (1 + 5%)^10 ≈ ₹40,72,000
Total Value: ₹12,57,500 + ₹40,72,000 = ₹53,29,500
Pune:
Total Rental Income: ₹25,00,000 × 4.35% × 10 = ₹10,87,500
Appreciated Property Value: ₹25,00,000 × (1 + 6%)^10 ≈ ₹44,77,000
Total Value: ₹10,87,500 + ₹44,77,000 = ₹55,64,500
Hyderabad:
Total Rental Income: ₹25,00,000 × 3.35% × 10 = ₹8,37,500
Appreciated Property Value: ₹25,00,000 × (1 + 7%)^10 ≈ ₹49,18,000
Total Value: ₹8,37,500 + ₹49,18,000 = ₹57,55,500
3. Analysis:
Highest Returns: Bangalore offers the highest projected total value after 10 years, primarily due to its robust rental yield and property appreciation rates.
Moderate Returns: Mumbai and Delhi also present strong returns, benefiting from high rental yields and steady appreciation.
Lower Returns: Kolkata and Pune yield comparatively lower returns, influenced by modest rental yields and appreciation rates.
4. Considerations:
Market Dynamics: Real estate markets are subject to economic fluctuations, policy changes, and demand-supply dynamics, which can impact actual returns.
Management Fees: Fractional ownership platforms may charge management fees, affecting net returns.
Liquidity: Exiting fractional ownership investments may involve challenges, including finding buyers for your share.
5. Conclusion:
Investing ₹25 lakh in fractional ownership of commercial
Here's the same analysis recalculated for an initial investment of ₹1 crore across the indices for 20 years, using their respective CAGR. The projected future value and the growth in crores are outlined below:
Diversified Investment in Nifties plus Sorted view
1. NIFTY IT: ₹26 crore
CAGR: 18%
Sector Focus: Information Technology.
Reason for High Growth: Digital transformation and global IT demand.
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2. NIFTY Next 50: ₹22.17 crore
CAGR: 16.85%
Sector Focus: Large mid-cap stocks with high growth potential.
Reason for High Growth: Companies transitioning to large-cap status.
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3. NIFTY Bank: ₹16.36 crore
CAGR: 15%
Sector Focus: Banking and financial institutions.
Reason for Growth: Stable demand for banking services in a growing economy.
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4. NIFTY 100: ₹10.83 crore
CAGR: 13%
Sector Focus: Top 100 NSE-listed companies.
Reason for Moderate Growth: Balanced exposure between NIFTY 50 and NIFTY Next 50.
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5. NIFTY 150: ₹10.83 crore
CAGR: 13%
Sector Focus: Top 150 NSE-listed companies.
Reason for Moderate Growth: Broader exposure with similar performance to NIFTY 100.
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6. NIFTY 50: ₹9.64 crore
CAGR: 12%
Sector Focus: Top 50 blue-chip companies.
Reason for Stable Growth: Low risk, steady returns from blue-chip stocks.
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7. NIFTY 500: ₹9.64 crore
CAGR: 12%
Sector Focus: Top 500 NSE-listed companies.
Reason for Stable Growth: Comprehensive exposure across market caps.
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8. NIFTY Metal: ₹8.06 crore
CAGR: 11%
Sector Focus: Metal production and manufacturing.
Reason for Growth: Cyclical sector benefiting from infrastructure demand.
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9. NIFTY FMCG: ₹6.72 crore
CAGR: 10%
Sector Focus: Fast-moving consumer goods.
Reason for Growth: Steady demand for essential goods.
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10. NIFTY Gold: ₹5.60 crore
CAGR: 9%
Sector Focus: Gold price tracking.
Reason for Moderate Growth: Gold is a safe-haven asset with consistent but modest growth.
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11. NIFTY Infrastructure: ₹5.60 crore
CAGR: 9%
Sector Focus: Infrastructure and utilities.
Reason for Moderate Growth: Steady progress in infrastructure development.
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12. NIFTY Auto: ₹4.66 crore
CAGR: 8%
Sector Focus: Automobile manufacturers.
Reason for Slower Growth: Industry evolution and competitive dynamics.
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13. NIFTY Platinum: ₹3.87 crore
CAGR: 7%
Sector Focus: Platinum price tracking.
Reason for Low Growth: Limited demand compared to other commodities.
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Summary (Initial Investment: ₹1 crore)
1. NIFTY IT: ₹26 crore
2. NIFTY Next 50: ₹22.17 crore
3. NIFTY Bank: ₹16.36 crore
4. NIFTY 100: ₹10.83 crore
5. NIFTY 150: ₹10.83 crore
6. NIFTY 50: ₹9.64 crore
7. NIFTY 500: ₹9.64 crore
8. NIFTY Metal: ₹8.06 crore
9. NIFTY FMCG: ₹6.72 crore
10. NIFTY Gold: ₹5.60 crore
11. NIFTY Infrastructure: ₹5.60 crore
12. NIFTY Auto: ₹4.66 crore
13. NIFTY Platinum: ₹3.87 crore
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Key Observations:
1. Highest Returns: NIFTY IT dominates with a projected ₹26 crore, thanks to a high CAGR of 18%.
2. Moderate Returns: Indices like NIFTY Next 50 and NIFTY Bank also offer substantial growth, surpassing ₹16 crore.
3. Lower Returns: NIFTY Platinum and NIFTY Auto offer the lowest returns, highlighting the importance of selecting high-growth sectors.
4. Diversification: Spreading investments across high-growth and stable indices can help balance risk and reward.
This comparison provides a clear perspective on how ₹1 crore invested today can grow across different indices over 20 years.
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