As an investor in the UK, you have likely discovered traditional real estate investment possibilities such as buying and renting out properties or flipping houses. However, these approaches can require a significant investment upfront and carry risks associated with property management and market fluctuations. The recent trends suggest having a fractional investment for steady growth.
Fractional real estate investing is a new-fangled alternative that is swiftly gaining popularity among investors worldwide. One of the noteworthy benefits of fractional ownership is the ability to diversify your portfolio by investing in multiple properties with smaller amounts of capital. For better understanding, instead of investing £7,50,000 in one property, you could invest £75,000 in ten different properties. This way, your risk is divided and categorized across various properties and markets, reducing the potential influence of a downturn in any single location.
According to a report by Deloitte, the UK prop-tech market is expected to grow to £6.5bn by 2025, with fractional ownership being a key driver of growth. The UK has seen substantial growth in fractional ownership platforms in recent years. The global fractional ownership market is expected to grow at a CAGR of 8.3% between 2021 and 2028, according to a report by Research and Markets. According to a report by estate agent Knight Frank, the global fractional ownership market was valued at $5.39bn in 2020 and is expected to grow to $8.92bn by 2025.
In the UK, property technology (prop-tech) start-ups like Property Partner, Bricklane, and The House Crowd have made fractional titles accessible to an extensive range of investors. These platforms typically offer a range of investment possibilities, from residential properties to commercial assets, allowing investors to choose the type of property and location that suits their investment goals. For example, Property Partner allows investors to invest in properties in London, Manchester, and Birmingham, among other cities, with investment minimums as low as £250.
Another benefit of fractional ownership is the potential for passive income. As a fractional owner, you do not need to worry about the day-to-day management of the property. The platform takes care of everything, from tenant management to property maintenance, allowing you to sit back and collect your share of the rental income.
Of course, like any investment, fractional ownership conveys risks. Property values can oscillate, and rental income is not guaranteed. According to a report by Property Partner, investors on their platform have earned an average return of 4.2% per year since 2015, with some properties generating returns of up to 10% per year. But it is not necessary that the graph of return remains the same in every location, so it is important to do your research before investing and choose a reputable platform with a track record of success. You should also be aware of any fees associated with the investment, such as platform fees, legal fees, and taxes.
In conclusion, fractional real estate investing provides an exceptional opportunity for investors in the UK to diversify their portfolios and potentially earn passive income from multiple properties. With the growth of prop-tech platforms, fractional ownership is more accessible than ever before, and investors have a wider range of investment options to choose from. However, it is essential to do your due diligence and choose an upright platform to minimize your risk and maximize your investment potential.
PLMD Group is a property development company that owns assets and offers investors the opportunity to invest fractionally in those assets. This allows investors to spread their risk across multiple properties and markets while enjoying the benefits of property ownership without the headache of property management.
If you’re interested in exploring fractional real estate investment opportunities, PLMD Group provides a range of investment options, including residential and commercial properties, with low investment minimums. As with any investment, it’s essential to do your due diligence and choose a reputable platform with a track record of success. Take action today and start diversifying your portfolio with fractional real estate investing through PLMD Group.