Sebi’s New Framework to Improve Investor Security for Fractional Real Estate Ownership

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With the implementation of the new framework, the fractional ownership sector is poised for a significant upheaval.

In order to safeguard investors’ interests, the Securities and Exchange Board of India (SEBI) made a number of decisions during its board meeting on Saturday, including some that dealt with fractional ownership.

According to industry experts, the move is a “positive and necessary step” that aims to regulate the real estate market for fractional ownership.

The founder and CEO of ALYF, which is India’s first technology-enabled marketplace that uses a smart ownership model to make vacation home ownership commercially accessible, Saurabh Vohara, commends SEBI’s action for improving transparency, investor security, liquidity, and easy exit options in the fractional ownership space.

“By formalising fractional ownership as an investment class, this move has the potential to create a dual positive impact: it will attract a segment of portfolios towards a larger market and increase the supply of hospitality assets to meet the growing demand in the travel and hospitality sectors,” stated Vohara.

According to Shravan Gupta, the CEO and founder of YOURS, a platform that allows users to own luxury second homes fractionally, this action shows that the market is becoming stronger and that investor demand is rising.

In order to formalise the industry, restore investor confidence, and handle the intricacy of Special Purpose Vehicle (SPV) securities issuances, SEBI’s proposed guidelines are essential. Relating to established practises in developed nations, the regulation is expected to foster the growth and acceptance of this novel form of property ownership, with particular benefits for retail investors who are not familiar with such structures, the speaker stated.

With the new framework, the fractional ownership sector is anticipated to undergo a significant metamorphosis.

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