Fractional ownership platforms have gained popularity as a means for investors to access high-value assets. However, in order to ensure investor protection and market integrity, property consultants have pitched several suggestions to the Securities and Exchange Board of India (Sebi). These suggestions aim to establish a regulatory framework, set minimum investment amounts, define investment tenure, and mandate an exit mechanism for fractional ownership platforms.
Regulatory Framework for Investor Protection: Property consultants emphasize the need for Sebi to establish a regulatory framework specifically designed for fractional ownership platforms. This framework would lay down guidelines and regulations to govern the operations of these platforms, ensuring transparency, fairness, and investor protection.
Minimum Investment Amount to Deter Fraud: To maintain the integrity of the fractional ownership market, property consultants propose that Sebi sets a minimum investment amount. This requirement would discourage fraudulent activities and ensure that only serious investors participate in this sector.
Defining Investment Tenure for Stability: Consultants suggest that Sebi sets a minimum investment tenure for fractional ownership platforms. This would encourage investors to commit to their investments for a specified duration and provide stability to the platforms by ensuring a steady source of income.
Mandating Exit Mechanisms for Investor Liquidity: One of the key suggestions put forth by property consultants is the need for Sebi to mandate an exit mechanism for investors participating in fractional ownership platforms. This mechanism would enable investors to exit their investments when needed, ensuring liquidity and flexibility.
Sebi’s Consideration and Future Decision: Sebi is currently evaluating these suggestions and is expected to make a final decision in the near future. The regulatory body aims to strike a balance between facilitating investor access to high-value assets and ensuring market integrity.
Benefits of Fractional Ownership Platforms: Fractional ownership platforms offer several advantages to investors. Firstly, they provide access to high-value assets, such as real estate, that would otherwise be out of reach for individual investors. Additionally, these platforms typically have low minimum investment amounts, making them accessible to a wider range of investors. Moreover, fractional ownership platforms often offer liquidity through exit mechanisms, allowing investors to convert their holdings into cash when needed. Lastly, these platforms prioritize transparency, providing investors with clear information about their investments and terms.
Risks Associated with Fractional Ownership Platforms: While fractional ownership platforms offer enticing benefits, it’s important to be aware of the risks involved. One significant risk is the potential for fraudulent activities, as the lack of regulations leaves investors vulnerable. Additionally, mismanagement of the property by the platform can lead to financial losses. Furthermore, the value of the property may experience volatility, resulting in potential fluctuations in the return on investment for participants.
Conclusion: The suggestions put forth by property consultants to Sebi aim to strengthen the regulatory framework and enhance investor protection in the fractional ownership market. While fractional ownership platforms offer opportunities to access high-value assets with low investment amounts, investors should be cautious and consider the associated risks. Sebi’s decision on implementing these suggestions will shape the future landscape of fractional ownership platforms in India, balancing accessibility and market integrity.
