SEBI to regulate providers of fractional ownership in real estate
ECONOMY & POLICY

SEBI to regulate providers of fractional ownership in real estate

To protect small investors, the Securities and Exchange Board of India (SEBI) has proposed regulating all online platforms that offer fractional ownership of real estate assets.

Typically, the term "fractional ownership" refers to modest investment stakes in real estate. In the past three years, a variety of web-based platforms have exploded, enabling investors to invest in buildings, warehouses, malls, and other real estate.

On these platforms, the minimum investment normally ranges from Rs 100,000 to 250,000.

“The lack of standard, uniform selling practices and lack of independent valuation, or of diligence of information or materials provided to potential investors could result in investors falling prey to mis-selling,” said SEBI, the nation’s market regulator, in the discussion paper.

Typically, a discussion paper is the first step before SEBI develops new regulations.

The regulatory body suggested that these platforms register under the Regulatory Framework for Micro, Small, and Medium REITs, where they would need to have independent trustees, sponsors, and investment managers.

According to the regulation, the net worth requirements for the sponsor and investment manager are 20 million rupees and 10 million rupees, respectively.

According to SEBI in the discussion paper, the underlying real estate assets offered on these platforms are comparable to the real estate or property described in the REIT Regulations.

Such fractional ownership has been available in markets like the United States and the United Arab Emirates since 2015.

See also:
SEBI introduces new regulatory framework for depository receipts
Infrastructure financing to evolve with new initiatives


To protect small investors, the Securities and Exchange Board of India (SEBI) has proposed regulating all online platforms that offer fractional ownership of real estate assets. Typically, the term fractional ownership refers to modest investment stakes in real estate. In the past three years, a variety of web-based platforms have exploded, enabling investors to invest in buildings, warehouses, malls, and other real estate. On these platforms, the minimum investment normally ranges from Rs 100,000 to 250,000. “The lack of standard, uniform selling practices and lack of independent valuation, or of diligence of information or materials provided to potential investors could result in investors falling prey to mis-selling,” said SEBI, the nation’s market regulator, in the discussion paper. Typically, a discussion paper is the first step before SEBI develops new regulations. The regulatory body suggested that these platforms register under the Regulatory Framework for Micro, Small, and Medium REITs, where they would need to have independent trustees, sponsors, and investment managers. According to the regulation, the net worth requirements for the sponsor and investment manager are 20 million rupees and 10 million rupees, respectively. According to SEBI in the discussion paper, the underlying real estate assets offered on these platforms are comparable to the real estate or property described in the REIT Regulations. Such fractional ownership has been available in markets like the United States and the United Arab Emirates since 2015. See also: SEBI introduces new regulatory framework for depository receiptsInfrastructure financing to evolve with new initiatives

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