Dubai-based fintech startup Stake offers a simple and accessible approach to investing in real estate properties in the UAE.
Dubai’s real estate sector continues to grow, with the annual transaction report issued by the Dubai Land Department showing that the industry has recorded more than 84,000 property transactions worth a total of AED300 billion in 2021. This is an indication of how the real estate industry remains a tangible and stable asset class in the UAE, and as such, one digital platform wants to empower people to invest as much as they want to in real estate properties. That’s the premise of Stake, a Dubai-based real estate investment platform, wherein, for as low as AED500 (approximately US$130), its users can start investing in real estate properties, without having to buy it themselves, or spending a substantial amount of capital.
Launched in January 2021, the Stake platform was founded by Rami Tabbara, Manar Mahmassani and Ricardo Brizido. The co-founders boast impressive backgrounds: Tabbara, co-CEO, was a former Senior VP of Sales at Damac Properties and has worked for over 15 years in real estate, Mahmassani, who is also the co-CEO, has more than 15 years of experience as an investment banker at Deutsche Bank and Falcon Group, while CTO Brizido is a tech wizard known for growing digital-enabled businesses, with the most recent of them being equity crowdfunding platform Seedrs. According to the trio, they were prompted to launch Stake after realizing a gap in real estate investing in Dubai.
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“[There was] no transparent and easy way for investors from all over the world to participate in the Dubai property market.” Tabbara says. “The MENA region has a huge affinity to real estate, but there are many barriers that prevent everyday investors from participating in this asset class, such as the high cost of entry, lengthy paperwork, opaque pricing, and overall clunky transactional process. Stake solves all these issues.” The team started working on the business during the COVID-19 pandemic, with the licensing process for the enterprise taking around nine months. Today, it’s registered in the Dubai International Financial Center (DIFC) and is regulated by the Dubai Financial Services Authority (DFSA).
With a vision to empower everyone to own and build wealth through real estate, the team prioritizes developing a simple, transparent, and hassle-free process for its users. This begins by identifying the best properties in the market- Mahmassani explains that the company is currently focusing on Dubai, but that other locations like the UK and KSA are in the offing. If a property meets Stake’s initial acceptance criteria, the team carries out a rigorous due diligence process, supported by its in-house proprietary machine learning model, developed in collaboration with the Massachusetts Institute of Technology (MIT).
Based on this analysis, Stake negotiates a price with the seller. After an asset is selected, it is put up on the platform for anyone to buy shares in it at costs as low as AED500. “A key condition in our selection process is that the property is already rented, and therefore, delivers a steady income stream for investors from day one,” Mahmassani explains.
“The real estate market can be quite opaque, so we are big on transparency, that’s why we provide all the data you need to make an informed investment decision, including an info memorandum, financial projections and a third-party valuation report.” And once a user picks a property and decides how much they want to invest, the combined capital investment from other investors will go into a segregated bank account until the capital meets the target purchase price.
Finally, when a property is 100% funded, Stake buys the asset through the use of a DIFC-based special purpose vehicle (SPV). “The SPV then becomes the new owner of the property, and every investor who participated gets issued shares in the SPV proportionate to their investment amount,” Mahmassani says. “For example, if you invest $20,000 in a property worth $200,000, you will own 10% of the property, and therefore, you will have a right to 10% of the rental income from the property, as well as 10% of the profit from appreciation in the value of the property.”
If the property is acquired, Stake handles all operational matters such as upkeeping and managing tenants- investors can simply receive monthly dividends from rental returns in their Stake wallet, which they can either withdraw, or invest in other properties on the platform. Finally, depending on the target hold period, when it comes to the exit process, Stake will manage the sale process as well.
Talking about hurdles that they’ve faced building Stake, Tabbara gets candid in pointing out that the biggest challenge they’ve encountered was raising awareness about the enterprise, especially within the region’s booming fintech space. “With so many fintech companies being launched in the UAE and in the region in general, it becomes harder to reach consumers, especially on the B2C side,” Tabbara says.
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“When we realized we had to be different and “louder,’ we focused heavily on our marketing, branding, and technology offering to differentiate us over others in the market. We knew that if we were successful in those three channels, we would be able to grow and scale our userbase.”