UAE residents no longer need millions of dirhams to invest in major real estate markets and build a portfolio as they soon will be able to own a property in US, UK and Europe with a small investment.
As residents can invest as low as Dh500 in growing Dubai real estate, earn a rental income and enjoy the benefits of price appreciation of the property, soon they will be able make similar low-budget investments in developed markets as SmartCrowd will expand its platform to major cities in the US, UK and Europe.
Siddiq Farid, chief executive and co-founder of SmartCrowd, said his platform is gaining popularity and plans are on the cards to expand his innovative initiative to the US and European markets in near future.
“We have just been focused on the local UAE market but very soon we will be marketing our platform to surrounding markets allowing them to invest in Dubai properties,” Farid told media.
“In next stage, we intend to provide international real estate on the platform allowing our investors to purchase in UK, Europe, US and other developed markets. The opportunities are endless and we are very excited how big this platform can become,” he said.
SmartCrowd, the DFSA-regulated property investment and technology platform, in September announced the lowest ever entry point for investing in the Dubai property market. It offers a range of investment opportunities to invest as low as Dh500 in prime areas like Dubai Marina, JBR and City Walk.
Benefit to all income groups
Ata Shobeiry, CEO at Zoom Property, said SmartCrowd funding can benefit people of all income groups to build wealth. He said people can now look for investment options beyond buying bonds or stocks with SmartCrowd platform.
“The initiative opens up new avenues for them to build wealth as they can put their hard-earned money to good use and become a part of the ever-growing Dubai property market. Foreign investors will also capitalise on this opportunity. This will ultimately benefit the economy,” Shobeiry said.
Yousuf Fakhruddin, CEO, Fakhruddin Properties, echoes similar views and said the innovative platform gives a new dimension to real estate investment in this part of the region.
“I think ‘Innovation and sustainability is at its best in UAE’ and SmartCrowd platform proves it.
He said fractional ownership has been a proven concept in UK and Europe, but this incredible way of making property accessible in an international hub like Dubai would add a whole new dimension to real estate investing.
‘While the demand for real estate has remained positive in this part of the world even during the pandemic, it is affordability that was becoming an issue as not everyone can afford investment of such magnitude in UAE. With an opportunity like this where an aspirant can own a property in Dubai for as low as Dh500, the masses would benefit greatly, and it will also help bring in a fresh momentum for the economy and open up to a new segment of buyers,” he said.
“Such new disruptive opportunities of real estate investments would make investments in the Real estate sector smoother and more viable for the masses. This is a big step towards making one’s dream of owning a property in Dubai a reality, without burning a hole in their pocket,” Fakhruddin said.
Due Diligence is a must
Ayman Youssef, vice-president, Coldwell Banker, UAE, said this concept in real estate is great for those who cannot afford to enter the market but want to invest. However, clients need to do their due diligence before making any decision.
“The intended buyers need to be aware of the fee structure of the company they choose to invest through. Are there any hidden costs to enter, operate and exit? They need to know the ownership structure — are they owning shares in a company that owns a specific asset or are they investing into a pool of different assets.
“What are exit options – if you invest in this real estate investment, what are the terms for exit? Ask important questions like – if there is no buyer for your share, will you still be able to exit when you need to or will you be stuck with the investment?” he said.
Youssef futher advised the potential investors to make sure that asset has an upside growth potential after covering service charge and the company fee.
“If invested with the right company, there is tremendous upside to this concept. It will open doors to people who cannot afford normal investments,” he said.
Easy to use platform
Farid said the platform is very easy to use. “We are a financially regulated platform with the DFSA so you have to create an account just like you would with a bank or brokerage firm. Once your account is verified you will have access to our investment platform and the available properties,” he said.
Elaborating, he said these opportunities are pre-vetted and screened using 100 data point proprietary tool. The investor than decides which properties they want to invest in and how much – from as little as Dh500. “That’s it! From that point we take care of the rest, including setting up of the shares. From start to finish this takes between three and five weeks. You then start earning regular rental income that is deposited in the investor digital wallet — this can be withdrawn anytime or re-invested into other properties,” he said.
Fully compliant with DLD rules
He said SmartCrowd is fully compliant with Dubai Land Department (DLD).
“Once the funding is complete we set up a DIFC company in which the investors are allocated their shares proportionate to their investment. This DIFC company then registers with DLD before purchasing the property,” he said.
“The investors have full legal recourse on their ownership on the property. They are listed as shareholders in the company on the DIFC public register and the same information is registered with the DLD,” he added.
Offering good returns
In reply to a question, Farid said the platform is gaining ground and attracting small investors as well as some reputable names in the industry.
“We have more than 20,000 registered users with 100s of investors that have collectively invested over D30 million on the platform. To date, we have already distributed Dh1.5 million in rental income to our investors,” he said.
So far, he said the portfolio on SmartCrowd platform has realised annualised returns of 7.4 per cent excluding capital appreciation.
“This is just rental income return. Individual property income returns can reach over 10 per cent depending on the property, location and rental strategy,” he said.
He said The beauty of a platform like SmartCrowd is it allows average hard-working people to build a real estate portfolio. It’s also easier for many people than taking out a big mortgage to buy one property.
“The rental income is paid out depending on how frequently the rent is collected. If the rent is collected monthly than the rent is paid monthly, if rent is collected quarterly then income is distributed quarterly,” he said.
“We have conducted over 40 property transactions over the last year but the velocity is increasing given the demand from investors. Before it would take on average 12-18 days to fund a property on the platform. Now, we are funding properties in 1-2 days, with the fastest funding to date completed in just two hours,” he said.
Developing smart investors
Farid said SmartCrowd empowers people to make their own investment decision.
“We provide each individual with easy to understand market data and our analysis. Typically only big institutional investors would normally get access to this kind of information but we make it available for everyone. For us it’s about education and making people ‘Smarter’ investors hence becoming part of the SmartCrowd,” he said.
On average properties on the platform provide annual yield of six per cent to seven per cent, which is much higher than you would earn in fixed deposit at a bank. “If you invest Dh1,000 your annual income will be Dh60 to Dh70. But also keep in mind you have invested in a property so if property prices increase by 20 per cent to 30 per cent in five years your Dh1,000 will be come 1,200 to 1,300 and you would have earned Dh60-70 a year so your total profit over five years would be Dh500 to Dh650 or a total return of 50 per cent to 65 per cent,” Farid said.
“We believe investors should stay disciplined and invest regularly. That is how the rich accumulate wealth over time. The alternative is to keep that Dh1,000 in your bank which will most likely be spent if you don’t invest.
“No investment is too small. It’s important to put your money to work and let it grow and work for you. SmartCrowd has made it possible for everybody,” he added.
Popular areas
Farid said platform has a range of properties in Dubai at the moment and registered users can invest any where on listed projects. This includes affordable areas like JVC and DSO, providing steady rental income or you can invest in prime areas like Marina, Downtown or Palm.
“You no longer need millions of dirhams to invest in real estate and build a portfolio. You can start with only Dh500 and grow it over time,” he said.
“About 65 per cent of our investors have multiple investments on the platform. On average each investor has bought into 3.5 properties. These are just normal people that have built a real estate portfolio over time and continue to do so. Real estate investing has never been this easy or fun!,” he said.
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