The United Arab Emirates faces a good problem: its real estate market is booming and there is no shortage of buyers. Rents in Dubai in 2024 rose 23% year-on-year to reach pre-pandemic levels, and sales increased 18%, according to Deloitteand this upward trend is expected to continue for years to come.
No doubt some of that demand is spilling over into neighboring Abu Dhabi, which is why the city’s sovereign wealth fund, Mubadala Investment Company, recently participated in a $14 million Series A round raised by Dubai-based Stake , which is bringing its fractional ownership investment platform to the UAE capital next year.
The Series A was led by Middle East Venture Partners with participation from Aramco’s Wa’ed Ventures and private investment platform Republic.
Founded by Manar Mahmassani, Rami Tabbara and Ricardo Brizido in 2020, Stake intends to use the new cash to fuel its international plans – with most of the money being used to enter Saudi Arabia in the coming months and expand into Abu. Dabi next year. Some of the money will also be used to offer more options in Dubai, such as investing in commercial real estate. The startup has raised a total of 26 million dollars to date.
For Abu Dhabi, supporting companies like Stake, which make it easier for people to participate in the property market by purchasing a share of a given property, makes sense to drive investment in its property market. The Emirate has over the years become a residential hub for people who work in Dubai but find it too expensive to live there, and it also fits very well with Abu Dhabi’s long-term plan to diversify its flows of income away from oil and gas production. .
The participation process is simple for real estate investors. It allows you to buy a share in a property that you manage on behalf of the shareholders and allows you to earn a share of the monthly rentals. If the property is sold, investors will also receive a portion of the profits. Staking also allows investors to sell their stake in a secondary market called Quit Windows which opens every six months.
Stake currently has over 200 properties under management with investors from around the world. The United Arab Emirates is home to the majority of its customers, and people from Saudi Arabia and Kuwait make up the majority of its international customer base. About 12% of its customers are from the US, Canada and the UK.
Stake has been planning to expand beyond Dubai for a while now; It had originally announced its entry into Saudi Arabia and Egypt in 2022, but postponed those plans citing economic volatility. Earlier this year, the company partnered with US-based private investment platform Republic. to attract more foreign investors.
And to attract more international investors, the startup, in partnership with Dubai International Financial Center (DIFC), is offering investors who commit at least AED 2 million (~$545,000) a golden visa (a renewable residency visa 10 years) in Dubai. That program was introduced in 2019 to attract foreign investment to the region and initiatives like this have reportedly helped foreigners drive investment Property in the region.
The company says it returns approximately 4% to 7% to its customers through rental income. Tabbara, who serves as co-CEO of Mahmassani, told TechCrunch that the company has so far paid out $4.5 million in rental revenue to its clients. He added that the average investment in properties is $1,500 and on average clients invest a total of $5,600 through the platform.
Entering Saudi Arabia
Stake claims it has surpassed Dubai-based fractional property investment platforms such as Smart crowdbut it will start again in Saudi Arabia.
Saudi Arabia already has companies such as Awaed and Aseel, which allow clients to invest in property through funds. Historically, only Saudi citizens have been able to have outright ownership of property in the country. Therefore, real estate investment companies created special purpose vehicles through which they allowed investors to purchase real estate.
“Saudi Arabia has recently completed and under development properties worth billions. we are going to use [our] experience to offer a similar unified product for investment in Saudi Arabia within the same application,” said Mahmassani.
Mahmassani noted that Stake aims to break even in Dubai by the end of this year and be profitable next year. The startup is also exploring partnerships to allow people from the Middle East to invest in property in countries like the United States.