Diversified Investment on Nifties & Fractional Ownership with diverse cities

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.