As prices increased in the first half of 2022, investors are finding that shared ownership of Dubai homes may be a good source of income. Shared ownership of houses and workplaces in Dubai seems to have struck a chord with investors, even if property value gains don't accelerate as quickly in the coming months, Developers as well.
A representative for Azizi Developments stated that fractional title deeds, in which many owners—up to four for each home—share the same rights on the land, now make up one in ten of the properties the company sells. And if one investor decides to withdraw, they can sell their shares without affecting the rights of the other three in any way.
According to Tizian Raab, a spokeswoman for the developer, who is now in the early phases of building and handover at its Riviera project in MBR City.
"We have made many fractional property ownership transactions — this has been a very popular choice for our retail units."
Platforms for property investments give rights on Dubai properties starting as Dh500 as buyers combine money to acquire ownership in residential or commercial real estate. Multiple auctions where investor buys or sell "shares" in a property as opposed to purchasing the entire item have occurred in recent weeks.
The potential of fractional ownership is being recognized by other developers as well, but they are leaving it up to investors to choose how they wish to participate. Dubai first started giving numerous documents on a single property last year. Since then, local auctions for the sale of a "share" in a property have taken place.
Investors using the shared or crowdsourced option frequently choose Dubai Marina as their location.
And there’s demand:
Since January 2021, Dubai's real estate market has been booming, initially because to end-user purchases and later thanks to foreign investors choosing the city as their primary or secondary residential base. The latter explains why the luxury end of the real estate market has seen such high demand.
In the middle of all of this, investors have also gathered their resources to purchase indirect exposure to real estate. Through this method, apartments in Dubai Marina, the Downtown, and Business Bay have been purchased. According to fractional ownership, only up to four buyers can receive titles to a property; however, a special purpose vehicle can be established to grant additional buyers rights to the same unit. That is what many residents and non-resident investors are interested in.
"In the current environment, real estate investments provide higher upside potential than alternative assets like crypto currencies. Many investors are switching over, either by purchasing a whole unit or part of one.
Timing the market:
Siddiq Farid, co-founder and CEO of the crowdsourcing site SmartCrowd, noted that timing the market is challenging for investors.
"We give investors access to the real estate asset class so they may ride the market wave patiently. Building a solid investment portfolio that can endure market circumstances is made possible by investing in uncorrelated assets."
"Warren Buffet once said that:
"what matters most in the market is how long you stay in it, not when you enter."
After leaving a real estate investment in Dubai Marina, SmartCrowd claims to have generated a total net return (rental income + capital gains) of 39.25 percent over a period of 17 months and an annualised return of 27.92 percent. The Marina Bay Central studio apartment was purchased by 53 investors through the SmartCrowd platform in February of last year for Dh530,000 and sold this month for Dh780,000. This amounts to a gross capital appreciation of 47%.
Investors can contribute as little as Dh500 to SmartCrowd, a fintech company with its headquarters in Abu Dhabi. Our goal, according to Farid, is to make alternative asset investing options more accessible to all investors.
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