Is buying a fractional property safe?
Fractional property ownership is when unrelated parties share in and mitigate the risks of owning property.
According to Shangco Properties Sdn Bhd managing director Datuk Chris Chin Shang Yoon fractional property ownership offers a lower barrier to entry, and investors' funds are not tied up for a specific amount of time.
Chin said investors can sell their shares when they wish, to receive a return proportionate to the increase in the value of the property.
He claims that investors will still hold the legal title of the property according to the number of fractions paid, allowing for flexibility in their investment choices.
Shangco Properties has launched a property investment platform that allows investors to buy fractions of properties such as houses, villas, hotels, resorts, and commercial properties from as low as RM10,000.
Chin said, to ensure strong investment returns, the brand identifies and acquires properties that are below market value to gain higher capital appreciation, while also managing rental yields to ensure sustainability.
"The real estate market has been in flux over the past several months. Given the economic downturn and recent volatility of the market, we want to provide protection and assurance to our investors, through our incredibly low-rate of entry with a high potential for profit," he said.
Chin said property ownership in Malaysia can potentially already be a challenge to secure, due to high prices and complications in the loan application.
"Even once securing the property, there is still the issue of maintaining a strong, stable return on investment. Low and inconsistent rental yields, together with low capital gain often see home-owners making a loss, compounded by bank interest.
"Selling the property is even more problematic, especially in a post-movement control order with many being unwilling to spend, as selling at a desirable price to simply cover the bank loan may not even be possible," he said.
Chin said fractional property can be purchased with cash or credit card.
He also claims that people without income documents can own a fraction property as there is no need to submit income documents.
"Fraction investors will come to a mutual agreement for a payout in five years following the sale of the property, earning returns on their investment in accordance with the length of their investment on top of the rental collection," he said.
