Teo: Fraxtor aims to push the digital frontier of fractional investing in Singapore. (Picture: Samuel Isaac Chua/The Edge Singapore)
SINGAPORE (EDGEPROP) - The path ahead for FinTech platform Fraxtor looks bright and lined with growth opportunities, as the blockchain-enabled real estate investment platform ramps up its investment offerings and boosts its consumer services over the next few years.
Fraxtor’s name is derived from “fractional investors”. The type of real estate investing that it offers provides individuals with a fractional share of a property development or investment. This enables investors to access institutional-quality deals that would normally be out of their reach.
Making real estate investing more accessible and promoting financial inclusion is a key mission for the company, says Rachel Teo, co-founder and director of Fraxtor. She says Fraxtor aims to push the digital frontier of fractional investing in Singapore.
Other members of the management team include Oliver Siah, co-founder; Edwin Lam, director; Felix Lee, CEO & executive director; and Joyce Ng, COO & executive director.
Opportunities in co-living and rental apartments
Fraxtor has made headlines in recent months after it successfully concluded fundraising and investment opportunities for a handful of landed projects in Singapore. These included a 30,659 sq ft, bungalow site at 21 Mount Rosie Road in May last year; the redevelopment of a 8,844 sq ft, freehold residential site at Haig Road in January 2020; and the redevelopment of a 4,335 sq ft, bungalow plot at Gardenia Road in May 2019.
At the moment, Fraxtor has mainly been involved in landed development projects in Singapore. The investment platform has also directed funds to invest in a food factory in Mandai.
“The recent property cooling measures in Singapore are unlikely to cause a knee-jerk reaction in the real estate investment market and landed segment here,” says Teo.
As proof, Fraxtor Capital and a group led by the family offices of Teo’s father and uncle, Daniel Teo and Teo Teck Weng, purchased Gloria Mansion en bloc for $70.3 million on Jan 19. The property is a 12-storey, freehold residential block with 31 apartments and located close to the Haw Par Villa MRT Station. Fraxtor Capital is a boutique real estate development company. It is the sister company to Fraxtor, which runs the fintech platform. (See potential condos with en bloc calculator)
See also: Gloria Mansion sold en bloc for $70.3 mil to Fraxtor Capital and group led by Teo family.
Overseas, Fraxtor has invested in student accommodation and healthcare facilities.
Teo says that the company has been looking to invest in more overseas markets to geographically diversify its portfolio and offer investors more investment choices. “Our focus will likely be in established and popular markets such as Australia, the US, Japan, and increasingly in China,” says Teo.
“Some interesting property asset classes that we are exploring include nursing homes and student homes. Data centres and logistics assets also see particularly high demand from end-users and investors,” she says.
However, Fraxtor will continue to have a strong component of local real estate investment assets. It is exploring the possibility of investing in apartment developments as rental demand in Singapore is expected to be relatively buoyant over the next few years, says Teo.
Another new segment it is keen to explore further in Singapore is co-living. “Co-living is thriving in Singapore and in some key global cities around the world. Locally, although the co-living market was highly fragmented over the past few years, it has started to consolidate with more established players,” says Teo.
This year will be an important milestone for the management team at Fraxtor. Their first landed redevelopment project that they invested in at Gardenia Road is expected to receive its Temporary Occupation Permit (TOP) by the end of this month.
“This is an important milestone for Fraxtor and our team, and we have all been looking forward to closing this project,” says Lam. Both houses in the Gardenia Road project have been sold.
The new development will be a pair of semi-detached houses at 5 and 5A Gardenia Road, off Upper Thomson Road. About 64% of the purchase price, or $3.4 million, was raised by fractional investors through the Fraxtor platform.
The completion of the two semi-detached houses at Gardenia Road marks the first completed landed project overseen by Fraxtor. (Picture: Fraxtor)
The next project they invested in that will be completed comprises three terraced houses at 187, 189, and 191 Haig Road, which will be constructed by the end of 2Q2022, says Teo. The three luxury houses have built-up areas that range from 6,414 sq ft to 7,343 sq ft.
EdgeProp Singapore previously reported that the corner house at 191 Haig Road had found a buyer who purchased the property for $7.6 million, or $2,999 psf based on the land area.
Fraxtor will also launch a new freehold landed project at Jalan Novena Selatan for sale in the coming weeks. This was an existing bungalow that will be redeveloped into two semi-detached houses.
The three terraced houses on Haig Road are expected to be completed by the end of June this year. (Picture: Fraxtor)
Fraxtor is also preparing to roll out new products to investors, capitalising on its Capital Markets Services (CMS) licence, as it has gained in-principle approval from the Monetary Authority of Singapore (MAS) to deal in capital market products.
The approval was granted in August last year, and the CMS licence, once issued, will enable Fraxtor to issue security tokens including debentures and collective investment schemes that comprise capital markets products. Previously, the company was operating under exemptions granted by MAS.
“The CMS licence gives us more flexibility to structure products for investors,” says Lam. Blockchain technology remains the bedrock of the investment platform’s offering, and Fraxtor uses it to issue real estate interest on a distributed ledger in a process known as tokenisation.
Expanding the digital frontier
The management team at Fraxtor has a strong belief in the ability of tokenisation to spur what they say is the increased democratisation of real estate investing. Fraxtor is banking on this technology to automate exchanges between investors and offerors, increase liquidity, lower capital requirements for investments, and improve overall transparency.
Says Siah: “We adopted blockchain technologies to initially create digital securities. So, as we tokenise investments and properties, it was easier for us to manage investors and developers.”
But going forward, he hopes that this technology will be compatible with stock exchanges in the future. “This means we would then be able to provide investors with a secondary market to make it more liquid for them,” he says.
“We believe that the investment landscape will transform over the next decade into a more digital environment. People will become more comfortable and accustomed to buying digital assets,” Siah adds.
One of the biggest challenges Fraxtor has faced over the past six years in adopting blockchain technology has been waiting for regulation to catch up with the fast-moving technology. However, Siah notes that MAS has become more supportive of a digital market, allowing more payment services and crypto exchanges in Singapore. The entry of institutional players also lends more credibility to this emerging digital space.
The next significant leap in the widespread adoption of blockchain technology is the facilitation of actual real estate assets on the blockchain. Many of the conveyancing issues that have delayed property transactions could also be simplified, shortening a three-month-long sales process to about three days, says Siah.
In the meantime, Fraxtor is cornering the market as a leading fractional investment platform for investors in Singapore. At the same time, the company continues to develop, and educate consumers on, the possibilities of blockchain technology in real estate investing.