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1. Introduction
Fractional ownership involving less than a 100 per cent interest in a property is a long-established concept that has raised specific issues regarding valuation, perceived risk and greater liquidity stemming from reduced levels of control and marketability relative to full ownership rights. Various structures, vehicles, partnerships or other legal entities have been used to manage fractional investment interests. Indeed, real estate investment trusts (REITs) constitute a form of fractional investment. However, with new technologies spurning the growth of digital platforms and the FinTech sector, a raft of alternative finance investment products has emerged. Many of these, such as crowdfunding, have enabled individuals for the first time to invest in property (Lowies et al., 2017). Indeed, O’Roarty et al. (2016, p. 2), reflecting upon the commercial real estate sector, observe that the industry “has not been immune to the transformative effects of technology, with disruptive forces leading to a re-evaluation of how real estate is bought, sold, leased and priced”.
Arguably one of the most comprehensive studies on alternative finance platforms is a series of reports from the Cambridge Centre for Alternative Finance which examines, on a regional basis, the application, update and impact of these platforms. The report for the Asia-Pacific region (Zhang et al., 2016) identifies crowdfunding as the main opportunity for real estate investment while digital-based platforms have opened-up the opportunity to enter into fractional property ownership. However, to date, there has been an absence of any empirical studies that analyse investor behaviour in terms of the motives for engaging with, and investing in, such vehicles.
This paper, in seeking to address this gap in the literature, focusses on investors in one particular form of fractional investment offered through a residential property platform. This internet-based platform gives an investor the opportunity to purchase a “brick”, representing the fractional interest in a residential property. Such a “brick” is held in trust which can be sold in an approved secondary market. The internet-based platform is unique in being completely online and available worldwide to invest in high end residential property. Even though the fractional interest is divided rather than undivided, the potentially disruptive nature of this residential property investment vehicle raises the question as to the type of investor that is...