Explainer: The future of property crowdfunding in the region

Crowdfunding is a necessary channel that developers need to be involved in

How has the Covid-19 pandemic impacted the regional real estate industry?

We believe that Covid massively helped the local and regional real estate industry. By being one of the first cities to open up and allowing tourists to come, Dubai became an even bigger destination hotspot than preCovid. This helped attract a record number of transactions in both the secondary and off-plan market in the first four months of 2021. Prices of luxury properties have seen a major uptick and people are realising how much value for money you get from investing in Dubai property. You also had a lot of residents who were renting realise that there isn’t a safer and better city in the world to live in, so they decided to become home owners. With the initial shock of

Covid pushing market prices to touch a bottom in Q2/Q3 2020, many end users decided to capitalise on the opportunity and buy a home in an upgraded villa or apartment. Moreover, when Covid struck, a lot of the big developers halted new projects which delayed more upcoming supply. This was something that was heavily needed and definitely helped in rebalancing the demand and supply equilibrium.

I also believe regionally, the GCC countries did a great job in handling the pandemic when compared to other major countries globally. That gave their domestic real estate markets a big boost from both local and international investors.

What are the key benefits of investing via a crowdfunding platform?

There are many benefits to using a crowdinvesting platform to invest in property. The main ones are the following: Portfolio diversification: instead of locking up your capital into one property you are able to diversify across different apartments in different areas. Diversity is the key to lowering risk. By splitting your portfolio across different units, you mitigate for vacancy risk (the time the apartment is empty); accessibility: you are able to invest in an asset class that usually has high barriers to entry from a cash perspective. Crowdinvesting enables you to invest in properties that you have not been able to have access before due to smaller investment size; passive investment/ hassle free: you are able to buy property without having to go through the paperwork and admin involved with registering the unit at the DLD. You are also able to earn monthly income from rent without the hassle of dealing with any brokers, finding a tenant, signing leases, handling maintenance and property management. The investment is carried out digitally from end to end, from acquisition to

exit; transparency and control: compared to investing via a REIT, crowdinvesting gives you greater control over the portfolio selection process and a closer look into the details of every property.

How can crowdfunding help regional developers?

Massively. Having worked with developers for the last 15 years, I see crowdfunding as a necessary channel that they need to be involved in. In our region, real estate is one of the most sought-after asset classes. People have an affinity for property from a young age. That being said, the entry points for many are high. With crowdinvesting, developers are able to offer their properties to a much bigger audience than they were able to without. I also believe that it allows developers to ensure their investors are not overcommitting their capital into one product, which reduces their default rates. Through crowdinvesting, developers can enable investors to experience and invest in a much larger and diverse inventory selection.

Which type of properties gain the most traction?

We are seeing that investors prefer to invest in locations that offer a stable rental yield with capital appreciation and preservation. These locations are mostly ones that are in prime locations. Having said that, we are also seeing that investors are open to looking at B locations if the price is below market and has a strong rental yield.

Is crowdfunding the future of property investment in the region?

Without a doubt. We believe that the world has massively changed after Covid. Technology is going to be the driving force in everything we do. Investors will not have the patience for long and tedious processes when they invest, and they will also prefer doing it digitally. Moreover, investors are a lot more cautious in where and how much they invest. We are seeing a big demand towards transparency and lower risk. Crowdinvesting ticks all of these boxes by enabling people to participate in real estate investment on their phone, from the comfort of their homes, and with smaller amounts.

THROUGH CROWDINVESTING, DEVELOPERS CAN ENABLE INVESTORS TO EXPERIENCE AND INVEST IN A MUCH LARGER AND DIVERSE INVENTORY SELECTION