Digital real estate investment is changing the way people access and diversify their property portfolios and offering new ways to invest securely and simply.
Real estate has historically been one of the best-performing investment assets and a core part of many of the most successful investor portfolios.
But investing in real estate — the way institutions do — traditionally hasn’t been available to most investors without either meeting high-net-worth requirements or going through a complex and inefficient process, riddled with high fees and outdated middlemen.
Recently I had a conversation with a real estate investor, only that he does not invest by himself. He and his friends put together money and acquire real estate assets to create returns from renting.
As he explained what it is I found it quite similar to a few concepts I have encountered in both Kenya and Dubai — timeshare ownership. Except this version is fractional ownership. I decided to seek to know more about what this is and how it works and how different it is from timeshare ownership.
So Fractional ownership is the percentage ownership in an asset. Fractional ownership shares in the asset are sold to individual shareholders who share the benefits of the asset such as usage rights, income sharing, priority access, and reduced rates.
While a timeshare is a shared ownership model of vacation real estate in which multiple purchasers own allotments of usage, typically in one-week increments, in the same property.
The timeshare model can be applied to many different types of properties, such as vacation resorts, condominiums, apartments, and campgrounds.
However, time-sharing is a form of fractional ownership, where buyers purchase the right to occupy a unit of real estate over specified periods, which they commonly term as lease period and is usually set at 99 years.
Timeshare has been marketed as predominantly for vacation homes around Kenya, it could be said it’s the same for fractional ownership. However, in modern times fractional ownership is not just for vacation homes but also for everyday homes.
Fractional ownership came about as the world becomes mobile there are opportunities to own property in different geographical regions thanks to innovative platforms that allow you to own property in other countries in Africa and reap property values different from those in the Kenyan real estate market.
The first public discussion on fractional ownership happened in 2016 as a developer was trying to set up a vacation community and since then not many have invested in it.
There seems to still be a lot of education on some foreign aspects of property ownership which a different from what we are used to. Mortgages are probably the biggest way people know how to own property when you cannot afford the full amount and you pay it over time.
However, Kenyans have practiced a lot of fraction property ownership whilst in groups without even knowing it yet with the modern spin on things not many people are coming together to co-own property.
In South Africa, it is slowly growing and it is featuring groups of people from across Africa who have understood the concept and taken it on. Even Kenyans who know what they gain by investing in different countries have taken to property ownership in the south.
Companies that are taking up the concept and offering platforms that allow Africans to invest in property anywhere in the continent are reaping the benefits of diversified portfolios for their clients.
As a Kenyan, you can easily sign up and invest in property in Namibia together with others or create your own group and invest in one property in another country. This will hopefully be the new way to invest in Africa.
Fractional ownership allows anyone who can afford anything from $1,000 to own a fraction of property and see returns from anywhere. Platforms like aviwealth.africa has laid down features of different properties and how one can invest with teams from every country involved. Globalization is definitely the future of property ownership and investment.