In focus: hBits, a fractional ownership platform for commercial real estate

Fractional real-estate ownership opens up a new window of opportunity to a relatively large segment of retail investors, who may be looking to own premium real estate without having the budget for it or simply for investment appreciation purposes. For instance, Alyf allows users to co-own a holiday home-sort. Another Mumbai-based startup, hBits, is also working in this fractional ownership space but focuses on commercial real estate. 

Founded in 2018 by Shiv Parekh and Samir Bhandari, hBits enables investors to invest in high-yield assets such as offices, warehouses, and commercial spaces at a ticket size as low as Rs 25 lakh. The low ticket size, however, is not the only thing that hBits is promising to its consumers. Its bouquet of services includes rent collection and property maintenance, credibility via due diligence conducted by tier 1 law firms, and returns of up to 8% to 10%. 

The startup aims to address the problem of limited accessibility to the lucrative asset class of commercial real estate. Traditionally, commercial real estate investments were primarily accessible to ultra-high-net-worth individuals (HNIs) and institutions, creating a barrier for everyday investors

How did you come up with the idea of the startup?

The founder of hBits, Shiv Parekh, discovered the success of the fractional real estate model during his MBA studies at Harvard. Leveraging his family's 35 years of experience in the real estate industry in India, Germany, and the UAE, he launched hBits with the goal of enabling retail investors to participate in commercial real estate growth… Recently, we introduced an AIF fund that focuses solely on real estate. Our idea was well-received by investors, particularly family offices and high-net-worth individuals with an interest in real estate investments. 

Please give us a walkthrough of your setup and business model. 

The platform currently manages assets worth Rs 230 crore. We are a tech-driven platform and the entire onboarding to investment journey is facilitated in our portal. A customer can log in and invest in less than 60 seconds through our platform. After investing, the customers can also track their investment on their investment dashboard. 

In the fractional model, we charge a commission to manage the property. Apart from the annual management fee, we charge a performance fee after a certain threshold is crossed. Our objective is that our investors make a maximum possible return and thus, we make money only when our investors make money. 

What new features will you add to the platform?

Our advanced customer onboarding and engagement platform will leverage cutting-edge algorithms to assess property values by analysing crucial factors like location, amenities, and market trends. This will empower investors to grasp the potential appreciation of their investments accurately.

Additionally, our platform will offer portfolio recommendations, scrutinize an investor's current ownership portfolio, and suggest diversification strategies to mitigate risk effectively. We plan to develop multiple APIs to ensure seamless integration with third-party applications. Furthermore, our platform will integrate RPA (Robotic Process Automation) bots to boost productivity, reduce time, cut costs, minimise human intervention, and lower error rates, streamlining operations and enhancing overall efficiency.

How do you plan to expand your business in the future?

We have already launched an AIF to capitalise on the warehousing space. The recent notifications by the regulators are a very positive sign for business as this will enable us to reach out to more and more investors. We also plan to explore other tier-1 cities. The platform currently features as many as 10 properties, all based in Mumbai.