Fractional ownership platform Strata is well on its way to achieve the target it set for itself this fiscal year- increase its assets under management by 50% to Rs 1,500 crore. “We’ll exceed that,” said company co-founder and chief executive Sudarshan Lodha in a conversation with DH.
The proptech startup is now looking to expand to the Gulf Cooperation Council countries in the next year and a half. “ The rental yields in GCC would be similar but the advantage there is taxation,” he reasoned.
The realty player, which has so far raised $7.5 million in two rounds of funding, is also exploring a new set of investors. A subsequent funding round before the end of this calendar year is likely, Lodha revealed. “We’re going to be profitable in the next six months, touch break-even at least,” he added.
Furthermore, it is looking at new asset classes such as retail and hospitality to diversify its portfolio which currently consists of industrial facilities (35%), warehouses (25%) and offices (30%).
With a minimum ticket size of Rs 25 lakh, “we’re for the 1% of India, as a product,” Lodha remarked. The platform charges 1% of the asset purchase price in yearly management fees, returning an average of 11-12% in rental yields in a typical leasing period of 3-15 years.
Talking about expansion into tier II cities, Lodha had his reservations. He spoke about challenges such as demand by developers for partial payment in cash and limited availability of large-scale quality assets. “Also, when I want to exit this property, who do I find in these tier II markets who’ll buy such a large property,” he stressed.
When questioned on benefiting from incentives offered by various state governments for real estate investments, Lodha said: “Incentives don’t reach... It is not for an investor as much as it is for an end industrial operator.”
Commenting on the Securities and Exchange Board of India’s recent proposal for regulation of fractional ownership platforms, Lodha called it a largely laudable move. However, he sees the mandate to hold at least 15% of the total units of the MSME REIT for each scheme as a spoiler. “Regulation is always a good thing although it can slow you down initially” he noted.
According to Lodha, so far 2,500 - 3,000 investors have deployed their capital on the platform while a total of 70,000 - 80,000 users have signed up. “I think out of that qualified users should be about 30,000-35,000,” he added.