Search for a command to run...
I am a millennial centric (and now maybe Gen Z too) content creator who simplifies the world of personal finance, so that your hard earned money doesnāt end up hardly working for you. After working in this field for over 7 years, my priority remains the same-to make personal finance less boring and more jargon free through my unbiased and well-researched content!
No comments yet. Be the first to comment.
In this series, we cover all companies/startups that are offering alternative investments on their platform. We cover their corporate structure, products they offer, etc.
KEY TAKEAWAYS IndiaBonds is a SEBI-registered OBPP platform aiming to simplify the bond market for Indian investors, offering a wide range of investment options including corporate bonds, government securities, and fixed deposits. The platform is b...
Many of you might have invested in Reliance Industries, TCS, HDFC Bank, SBI, or Infosys. After all, these are amongst the biggest companies in India which are listed on the stock market, so you can co
Real estate has traditionally been a āhigh-ticketā asset class. Either having lakhs (or even crores) of Rupees in your bank account or taking a huge home loan were the only two prominent ways to buy property. But that is changing now with fractional ...
Indiaās Finance Minister Nirmala Sitharaman is set to present the Union Budget this week on February 1st, 11 am. This will be her ninth consecutive Budget presentation, which brings her closer to former Finance Minister Morarji Desaiās record of pres...
Imagine you are an absolute equity lover. Stocks are your thrill ride, while debt funds are just a sleepy side note in your portfolio. But what if I told you there were years when those āboringā debt funds left the stock market in the dust? And not j...
Can I ask you a question? Donāt worry, it's not a complex mathematical problem. Just a simple one- Whenever the stock market feels noisy and makes your portfolio bleed red, whatās the one thing you secretly wish for? I am sure it must be about having...
Claravest is a fractional real estate ownership platform founded in 2023, allowing retail investors to invest in residential properties with a minimum investment of Rs 1 lakh, making real estate more accessible and affordable.
The platform focuses on residential real estate, offering fractional ownership in properties and holiday homes, with strategic partnerships and listings from reputable developers such as the Hiranandani group.
Claravest's business model includes revenue streams from acquisition and management fees, marketing fees, performance fees, and its own investments in properties, earning through rental yield and capital appreciation.
While currently unregulated, Claravest's founders have expressed intentions to apply for an SM-REITs license in the future, which could enhance its credibility in the fractional real estate ownership space.
The platform differentiates itself from REITs by offering concentrated exposure to specific properties, allowing investors to become co-owners and earn returns from property rent and capital appreciation, unlike the diversified portfolio approach of REITs.
Owning a house of your own is a dream that most of us are eager to make a reality, right? Some of us might have already done it or are planning to do so soon. It's often because of this exciting financial goal of owning a home that we dive into the real estate market, aiming to find that perfect property to call home. But what about real estate as an investment?
Have you ever thought about buying a residential property just for investment? If not, why not? Maybe the main reason has been the huge amount of money needed to buy a residential property, not for living, but as an investment. Now, you might be wondering if there's a way to enter the real estate market with a smaller amount, making it more accessible for retail investors like you and me, right? Well, guess what? Your wish just came true! This is where the amazing concept of fractional ownership comes in to let you invest in real estate without having to spend a fortune.
Reports from UK-based Knight Frank show that India's ultra-rich have invested about 32% of their wealth in residential real estate. The market is expected to reach US$ 906 billion by 2034, highlighting great potential for retail investors.
So today, let us deep dive and bring to you the company profile of Claravest, which is a real estate and fractional ownership platform. It aims to make real estate affordable and accessible for retail investors by allowing you to invest in properties starting at as low as Rs 1 Lakh, and earn rental yields as well as property appreciation.
If you prefer video format more, we have a podcast with the founders Karan and Mananki, check it out here:
Claravest is a fractional real estate ownership platform that was founded in the year 2023 by Mananki Parulekar and Karan Shetty.
Karan comes with a diverse work experience of nearly 15 years, having worked mostly on the product management and business analysis side, with companies such as SAP, Mercedes-Benz, Tata Consultancy Services, and Kaiser Permanente.
Mananki has a diverse experience of around 15 years, in companies such as eBay, Kaiser Permanente, Robinhood, and KPMG, mostly in the field of IT Audit and Advisory. Also, Mananki comes from a real estate family background. Her family has been into the residential and commercial properties business in Panvel, Navi Mumbai since about 30 years, which indicates that she has had exposure to the real estate sector and isnāt new to it.
Claravest is a fractional ownership real estate platform focused on Residential Real Estate. It allows retail investors like you and me to invest smaller amounts, starting at just Rs 1 lakh, instead of crores. This makes real estate investment accessible to retail investors, who typically avoid residential real estate due to the high costs involved.
Who the heck invests in Residential Real Estate, there are so many finfluencers giving gyaan on the low rental yields residential properties have! And and they are not wrong, when compared to commercial real estate, residential real estate does tend to have lower rental yields.
But evaluating an opportunity just on this basis is short-sighted. Extremely short-sighted. Around 80% of the real estate market is residential. If people stop investing in residential properties, imagine what will happen to the housing market? Hence, the opportunity should be looked as a total return i.e. rental yield + capital appreciation a few years down the line. And you maybe surprised, residential properties in some pockets of India very well deliver higher total returns than their commercial counterparts.
The simple reason for this is Residential assets are smaller in size, they are easier to offload because the market is a bit more liquid than commercial assets. Imagine selling a 3 Crore INR flat compared to 30 Crore INR property. There will be a lot more buyers for 3 Crore INR product as compared to the 30 Crores one.
Claravest targets properties with high appreciation potential over the next 4-5 years by selecting strategic micro-markets in Tier-2 cities. The company evaluates locations based on infrastructure developments, government policies, and industrial growth, as these factors often drive urban migration, leading to increased property value, said Karan Shetty, Co-Founder, Claravest
Claravest primarily offers fractional ownership in residential real estate and holiday homes in destinations like Goa, Alibaug, Lonavala. They have also formed an exclusive partnership SaffronStays to do this. If you invest in holiday homes, Claravest also gives you the option to use the villa for certain time frame of the year.
Claravest primarily makes money through these four main streams of revenue:
It charges an acquisition and management fee from the investor, at the start of the investment period. To be clear, fees is only charged once an investment is done.
It charges a marketing fee from the developer as and when the platform is able to sell the developerās property.
It charges a performance fee, this fees vary depending on the property type. If it is a typical residential asset, then we charge a performance of 20% above a hurdle rate, and if it is a vacation home, then we charge a flat 0.5 - 1% of the sale value.
Claravest also has its own skin in the game by claiming to invest in most of its properties, it earns through rental yield and capital appreciation from those assets, which is also considered as its revenue.
This is a hot topic in the overall fractional real estate community given the new SM REIT Guidelines by SEBI. So answer is NO, Claravest is currently an unregulated platform. However, in our podcast with them, the companyās founders had shared their intention to apply for SM-REITs license in future, with SEBI but they are still evaluating on how effective will it be for their business model.
Diversification: Claravest is probably the only fractional real estate ownership platform that is offering the option for retail investors to invest in residential real estate. Most other platforms such as Strata, hBits and PropertyShare focus on commercial real estate and office spaces. So this gives the option of diversification to retail investors.
Investing Own Money: Claravest also has its own skin in the game by investing (about 5%-10% of the deal amount) in most of its properties through which it earns revenue through rental yield and capital appreciation, this develops an added layer of trust amongst customers.
Due Diligence: Before listing any property on its platform, Claravest performs a rigorous due diligence process to ensure that investors get maximum returns with minimum level of risk. Factors that are considered for selection of properties, includes the growth potential of the locations, past project completion records of construction developers, clarity in property title and RERA registration. Manankiās family background is real estate also helps add credibility to this.
Before we go ahead with the conclusion, I think itās important to also touch upon another aspect, which is how REITs are different from fractional real estate ownership platforms.
While both fractional ownership and REITs provide access to real estate assets, they differ in several ways.
REITs are publicly traded instruments where investors buy and sell units to receive dividends and make capital gains.
In contrast, fractional real estate ownership platforms like Claravest make investors shareholders of a Special Purpose Vehicle (SPV) that owns the property you choose to invest in. The platform manages the property for the SPV. You invest in a specific property, becoming a fractional owner based on your investment amount, and earn returns from property rent and capital appreciation upon sale. In simple terms, you own a portion of the property as a co-owner.
Additionally, fractional real estate ownership platforms typically focus on single properties, offering investors concentrated exposure.
On the other hand, as an investor, you can buy units of REITs, which invest in a pool of multiple properties, offering a diversified portfolio across various locations. This means you don't need to directly own a property.
Fractional real estate ownership provides listings for specific properties, unlike REITs, which pool multiple properties together. REITs operate somewhat automatically.
Also, remember that REITs require a minimum asset value of Rs 500 crore. For SM REITs, fractional ownership platforms with a minimum AUM (assets under management) of Rs 50 crore and investment managers with a minimum net worth of Rs 20 crore can register as SM REITs. Why did SEBI do this? This decision was made to encourage pooled investment in real estate assets or properties, promoting further growth for REITs.
As we mentioned before, fractional real estate ownership platform Claravest does not require to have crores of rupees to invest. It lets you invest in residential properties for as low as Rs 1 lakh, reiterating its aim to make real estate both affordable and accessible for everyone.
By now, we hope you had got a fair idea about what fractional real estate ownership is and what platforms such as Claravest do. Honestly, they are indeed pioneering a new approach to real estate investment by offering fractional ownership in residential properties, starting with an amount of as low as Rs 1 lakh, thus making it more accessible and affordable for retail investors.
Though it is currently an unregulated platform, Claravest's founders have expressed their intention to apply for an SM-REITs license in the future, which could enhance its credibility. But first they need to figure out the minimum 20 Crore INR net worth requirement and also collate properties upto 50 Crore INR to form a SM REIT.
The platform's collaboration with reputable developers like the Hiranandani group can be further seen as a sign of its potential in the fractional real estate ownership space. While there are some challenges, such as the lack of regulation, Claravest's unique offerings and commitment to due diligence make it a good option for those looking to diversify their investment portfolio by investing in residential fractional real estate ownership.
Please note that this is an opinion blog and not an official research or investment advice. This blog aims to help retail investors make an informed decision when thinking of real estate sector. The blog neither encourages nor discourages you from investing in any particular platform or property or any asset class.
We plan to come up with more blogs discussing company profiles for various other platforms in the alternative investments space, and also write on different types of instruments available in the world of alternative investing. If you want to stay updated on the latest blogs, please subscribe to our newsletter so you get notified automatically.
Thank you for your time. Hope this article turned out to be a good read for you. If yes, we would love it if you could join our Whatsapp community by clicking here. If you have any questions or feedback regarding this article, please mention in the comments below.
