Dubai: Shared ownership in Dubai properties is turning out to be quite an income generator for investors as values gained in the first six months of 2022. Even if increases in property values don’t show the same speed in the next few months, shared – or ‘fractional’ – ownership of homes and offices in Dubai seem to have hit the mark with investors. And developers too.
An Azizi Developments’ spokesperson said that 1 out of every 10 properties it sells these days is on fractional title deeds, where multiple owners – up to four to each property - share the same rights on the property. And if one investor wants to exit, they can then sell their share without impacting in any way on the rights of the other three.
“We have made several fractional property ownership sales - this has been a particularly popular option for our retail units (which are part of the communities Azizi is building),” said Tizian Raab, the spokesperson at the developer, currently in advanced stages of construction and handover at its Riviera project in MBR City.
We welcome - and eager to offer – investors/end-users as many safe and convenient options as possible. When new laws emerge, we do however make sure that these are 100% tested and fully functional - we do not wish to experiment.
In recent weeks, multiple auctions have taken place where investors buy or sell 'shares' in a property rather than pick up the whole thing.
Other developers too are catching onto the fractional possibilities, but leaving it to investors to decide the way they want to get in. It was last year that Dubai made the move on granting multiple deeds on single properties. Since then, there have been auctions happening locally related to the sale of a ‘share’ in a property.
And there’s demand
Dubai’s property market has been on a roll since January 2021, first with end-user buying and then from second-half of the year, global investors turning to the city for their primary or second residential base. The latter explains why there has been such demand in the luxury end of the property market.
Amidst all this, there have also been investors pooling their funds to take up indirect exposure in properties. Apartments at Dubai Marina, the Downtown and Business Bay have been bought through this process.
“While deeds are issued to a maximum of four buyers in a property under fractional, a Special Purpose Vehicle can be created to allow more buyers have rights on the same unit,” said a property analyst. “That’s what has interested quite a few resident and non-resident investors.
“Property investments in the current scenario provide better upside opportunities than alt-assets such as cryptos. A lot of investors are making that switch, either buying a full unit or partial.”
Timing the market
“As an investor, it's difficult to time the market,” said Siddiq Farid, co-founder and CEO of the crowdsourcing platform SmartCrowd. “As Warren Buffet says, it's not when you enter the market but rather how long you stay in the market.
“We allow investors to access the real estate asset class and be patient to ride the market wave. Investments in un-correlated assets allow you to build a strong investment portfolio that can withstand market conditions.”
SmartCrowd says it delivered a 39.25 per cent total net return (rental income plus capital gains) over a 17-month period, and 27.92 per cent return on an annualized basis, after exiting from a Dubai Marina property investment.
The studio apartment in Marina Bay Central was bought by 53 investors through the SmartCrowd platform for Dh530,000 in February last year, and sold for Dh780,000 this month. This works out to a 47 per cent gross capital appreciation.
SmartCrowd, an Abu Dhabi-headquartered fintech firm, allows investors to put in funds from Dh500. “Our mission is to democratize access to alternative asset investment opportunities for every investor,” said Farid.
