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Department of Urban Planning and Municipalities and Smart Crowd Holdings Limited sign MOU at Cityscape Abu Dhabi

MoU set to promote the exchange of best practices for crowd-funded real estate investment.

The Department of Urban Planning and Municipalities have entered into a Memorandum of Understanding (MOU) with Smart Crowd Holdings Limited on April 16th, 2019 in the presence of His Excellency Mohamed Al Khadar Al Ahmed, Executive Director of Strategic Affairs Sector, at Cityscape, Abu Dhabi’s largest real estate exhibition. Smart Crowd is an innovative real estate crowdfunding platform that allows individuals to invest in partial ownership of real estate, lowering entry costs into the real estate market. The platform is regulated by the Dubai Financial Service Authority (DFSA).

The agreement, signed by His Excellency Mohamed Al Khadar Al Ahmed on behalf of H.E. Mubarak Obaid Al Dhaheri, Undersecretary of the Department of Urban Planning and Municipalities and Mr. Siddiq Farid, Chief Executive Officer and Founder of Smart Crowd Holdings Ltd. is a result of the Department of Urban Planning and Municipalities’ aim to encourage the private sector to participate and innovate in Abu Dhabi’s real estate market, and promote economic growth in the country by encouraging real estate investment through collective ownership.

The MOU will allow both parties to explore the possibility of implementing a similar model of collective or joint ownership in the Emirate of Abu Dhabi, and develop proposals on the implementation of such a model in accordance with the laws and legislation in the Emirate.

“We are pleased to work on the proposed partnership with Smart Crowd. We hope to work together with the private sector to develop innovative ideas and mechanisms in the field of property investment in line with the Department’s interest in the growth of the real estate sector in Abu Dhabi,” said His Excellency Al Dhaheri.

Smart Crowd has opened the real estate market to a new generation of savvy investors, shifting the traditional real estate investment model. Interested investors simply need to register with Smart Crowd, choose a vetted investment property, and invest a fraction of the property’s value. Once the investment is made, ROI in the form of rental income is almost immediate.

“Our aim is to open the doors for individuals who want to invest in the real estate market, but who may see the initial capital investment as an obstacle. We are excited to bring this idea to the Abu Dhabi real estate market, and are thrilled to work with the Department of Urban Planning and Municipalities to do so,” said  Mr. Siddiq Farid.

The MOU will promote the exchange of experiences and best practices in real estate investment through shared ownership.

About Smart Crowd

Smart Crowd is a digital real estate investment platform which provides the opportunity to buy and sell shares in properties, reducing barriers to entry to low-middle income households to build financial assets and generate investment income. Smart Crowd caters to most people who find it hard to get on the property ladder to build a diversified portfolio and “unlock their wealth potential”.

In April 2018 Smart Crowd became the first and only financially-regulated digital investment platform in MENA. We provide users with active share management, transparency in their property investment, low investment cost and very low minimum investment levels.

Smart Crowd Holdings Ltd.  (Smart Crowd) is regulated by the DFSA. Smart Crowd’s Licence is a restricted ‘Innovation Testing Licence’ and it is restricted under the DFSA Licence to testing its platform. Due to the limited nature of its Licence, normal Client protections may not apply and Clients may have limited rights if they suffer as a result of taking part in testing. 

Smart Crowd is part of the region’s leading fintech accelerator, DIFC’s Fintech Hive, and has won numerous awards including Accenture Innovation Award at GITEX 2017, Sharjah Entrepreneurship Festival Pitch competition, and Smart Dubai’s Global Blockchain challenge.

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Why buying off-plan may put property buyers off

Purchasing off-plan properties is still a very popular way to jump into the real estate market, particularly in Dubai. Already in 2019, over half – 55 per cent – of all real estate transactions have been off plan. Investors are eager to be involved in the real estate market, and many first timers are using off-plan purchases as an affordable way to get on the property ladder.

While purchasing an off-plan property may seem like a low-cost way to enter the property market, there are a number of variables that you have no control over that will affect your return on investment. With so many unknowns, purchasing properties off-plan can turn from an investment to specualtion. Hoping that once the property is handed over it will be worth more than when you purchased it is nothing short of a roll of the dice.

Most off-plan properties have an expected handover period of 3 to 5 years, but unfortunately the industry has a bad track record. Only 40 per cent of projects in Dubai get delivered on time, meaning an off-plan buyer would have to wait even longer to see any return on investment. During this time, the money that was invested is totally inaccessible in case of a major life change such as a job loss, or a drastic change in the real estate market itself. This puts all of the risk on the shoulders of the buyer.

If you do manage to make it through the nearly six years it might take to receive your property, your return on investment may still not be all that you had hoped. In the current market, off-plan properties are selling at nearly the same price per square foot than the existing or “ready” market. It may be worth more in the future, but then again, maybe it won’t – that is the risk that off-plan buyers take on.

Now with post-handover payment plans, purchasing off-plan can seem even more attractive upfront – but buyer beware. Developers and brokers can be misleading when they claim that buyers will see great returns on a four or eight year post-handover payment plan. They calculate returns based on only what has been paid until the date of the handover, and then determine the rent on that money, ignoring the fact that the buyer will have to pay the remaining 40 to 50 per cent over eight years. Factoring in the cost of the service charges, many times buyers end up paying out of pocket as their returns don’t cover costs.

Let’s take an example of a AED 1 million property that is expected to be handed over on 4 years with 5 year post hand over payment plan. Let’s assume you are required to pay 30% until the handover and the remaining 70% during the 5-year post hand over plan. For simplicity we will assume all payments are paid on a linear fashion. In the first 4 years to handover you will be obliged to invest approximately AED 75,000 per month. Remember this is money being paid to the developer and you are not earning anything on it yet. Once the property is handed over and lets assume you can rent it out for AED 80,000. Lot of agents and developers sell the idea that you have only put in AED 300,000 (AED 75,000  x 4) and are earning AED 80,000 in rent and that is 26% ROI. This is extremely misleading as they forget to mention that you still have 70% of the property value to pay.

On a 5 year post hand over payment plan that equates to AED 140,000 per year. Even if we don’t assume service charges, property management or any other fees you are still required to pay an additional AED 60,000 out of your pocket for another 5 years (AED 140,000 less rent AED 80,000). So for the next 9 years you will only be paying and not earning any return on your money. The posthna over payment plan is good as you got your renter to pay for part of the property purchase. The AED 1 million property only costed you AD 600,000 as the renter paid AED 80,000 per year for 5 years. Now let’s assume the property is worth AED 1.3 million at the end of these 9 years your total return will be an impressive AED 700,000 on your AED 600,000. Not bad at all but it took you 9 years to earn that. However, we have not assumed any delays, any service charges or other costs. If the property prices don’t increase or your rent is less than the returns will be much lower. You need a lot of things to go right your way for you to make money on an investment like this over a long period of time. It could work out or it could not.

You as an investor should be rewarded for the risk you take. Now assume a similar property can be purchased on day one that is rented at the same price. You would buy that for AED 1 million and collect AED 80,000 rent per year and after 9 years that property is worth AED 1.3 million.  In the 9 years you would have earned AED 720,000 in rental income and AED 300,000 in gain on the property for a total of AED 1,020,000.  Keep in mind you did have to park AED 1 million in this case, but you started earning right away and had more control on your investment. If you look at the returns in % terms, there is not much difference.  If you factor in the time value of money the off plan might have a slight advantage. Total returns are not too dissimilar, but the risk levels are very different. Off plan is much riskier than buying something that is ready, and you can start earning right away. For higher risk your return should be higher than the alternative. If that is the case and you are getting rewarded more for the level of risk, you are taking than it might make sense to go down that route but if you are getting the same return than why would you take on additional risk. 

Thankfully, there is more than one way to buy into the real estate market without emptying your bank account with a huge upfront purchase cost. Crowd-sourcing platforms like Smart Crowd bring the same affordability that off-plan purchasers are looking for to the ready market by allowing buyers to invest in a fraction of the total property. What is more, with crowd-sourcing investment platforms, buyers need not wait years to see a return on their investments – they can start seeing rental income from day one. Find out more details on www.smartcrowd.ae.

In the long-term, crowd-sourcing also protects your investment, as you won’t need prices to increase substantially for you to make high returns. A steady rental income releases you from the ebb and flow of a volatile market.Real estate investment may feel like a gamble, particularly when purchasing off-plan properties. Savvy investors who want to buy into the real estate market without throwing the dice look to group investment platforms to provide a low cost to entry, immediate returns and less risk.

Warren Buffet’s real estate brokerage to launch in Dubai

“Be fearful when others are greedy and greedy when others are fearful” – Warren Buffet

Warren Buffet’s real estate brokerage firm Berkshire Hathaway HomeServices Gulf Properties has announced its expansion in the Middle East market with offices in Dubai. The announcement comes with the prediction that the property market is expected to see further fall in prices.

“Dubai has been a top priority for our network’s global expansion,” Berkshire Hathaway HomeServices Chairman Gino Blefari said in Sunday’s statement. “Gulf Properties will connect our growing brokerage network between East and West.”

Read the full article here.

Smart Crowd closes funding for fourth transaction at Marina Diamond 1

Smart Crowd has closed funding for its fourth transaction at Marina Diamond 1 in Dubai Marina. The property was funded with 15 investors out of which 9 were repeat investors, and an average investment amount of AED 32,000. The studio apartment is located in the prime residential and leisure destination of Dubai Marina with quick access to the Marina waterfront, surrounding bars/restaurants, shops and a 5-minute walk to the metro station making it a popular holiday and residential rental.

The unit is currently tenanted under a long term rental agreement until August 2019, making it an income generating investment. The unit is going to be converted into a holiday home with prospects of generating 20-30% above market rent through short term offerings, with an expected net yield of 7.6% compared to market gross yield of 8-9% in Dubai Marina.

According to a recent article in Bayut, Dubai Marina remains one of the most highly demanding areas for renting apartments in Dubai. Therefore, the Marina Diamond 1 is a lucrative, affordable investment option for investors.

Source: Bayut

Breaking down the mental barriers to investing in Dubai’s lucrative real estate market

There is no avoiding it – purchasing property for investment can be stressful. From identifying a location that will be popular for renters, to the upfront costs of actually purchasing the property, and then the cost and risk of maintaining your purchase, you might be inclined to give up before you have even begun. Factor in that 1 in 3 UAE expats are worried about their financial future, it is likely you are experiencing what can only be described as a “mental barrier” to taking on investment risks.

These feelings are amplified if you are coming from a long-established market like the US, UK or Europe. You might feel that investments at home come with lower risks and regulations established around consumer rights.

Still, there is a great deal of motivation to be involved in the regional property market this year. It is a buyer’s market, and property prices have fallen 10 to 20 per cent across locations. With Expo 2020 on the horizon and construction projects popping up all over the country, investing in property now could mean a huge payoff in the future. If you have the desire to invest in rental properties in Dubai, but are simply unsure, you are in good company – 1 in 3 UAE expats are motivated to make investments, but don’t know the right options.

The solution to the anxiety that comes with investing in rental properties in the UAE is crowdfunding. Groups of people are coming together on platforms like Dubai’s Smart Crowd to break into Dubai’s lucrative property market without the stress. With crowdfunding, potential buyers are able to access the rental market for investments starting at AED 20,000. By spreading the investment across a group of people, each individual investor takes on a less risk, alleviating much of the stress that goes along with maintaining, securing and renting a property. 

The benefits with crowdfunding your property investment are outstanding. You will be able to jump into the Dubai property market at a time when prices are low and potential is high. It is easy to get started with a crowdfunding platform and, in Dubai, crowdfunding  is both regulated and secure. 

If you want to take advantage of this buyer-friendly Dubai property market but are losing sleep over the potential risks, crowdfunding could be an excellent alternative solution. With a low cost to entry, mitigated investment risks and a high potential for lucrative returns, with crowdfunding you can both cash in on real estate opportunities and rest easy.

Real Estate Investment start-up, Smart Crowd bags Fintech of the Year Award

The digital real estate investment platform, Smart Crowd, has won “Fintech of the Year” at this year’s Arabian Business Technology Awards. The awards attract participants from throughout the region, and recognises only the best in the field of IT. In a pool of highly competitive nominees, the Dubai-headquartered Smart Crowd was selected as “Fintech of the Year” owing to its innovative approach to real estate investing and its speed to market.

The platform’s innovative crowdfunding model has enabled a new generation of investors to participate in the real estate market, shifting the traditional investment mindset. Smart Crowd’s model lowers barriers to entry for investing in the real estate market by eliminating the need for large lump-sums of cash, increasing diversification and practically eliminating bureaucracy traditionally associated with purchasing a property asset.

With Smart Crowd, users simply need to register, choose a vetted investment property, and can  invest a fraction of the property’s value. Once the investment is complete, investors can start seeing a return on their investment in the form of rental income in proportion to their ownership.

The Fintech of the Year award is the latest in a string of wins for Smart Crowd. Smart Crowd was selected in  the region’s only fintech accelerator, DIFC’s Fintech Hive, and in 2017 won the Accenture Innovation Award at GITEX and Best Startup at Sharjah Entrepreneurship Festival. Smart Crowd was also the runner-up at Smart Dubai’s Global Block Chain Challenge at the inaugural Future Blockchain Summit. In 2018 Smart Crowd became the first and only financially-regulated digital real estate investment platform in the MENA region.

“We are honored to be recognized as Fintech of the Year, and are thrilled at what we have managed to accomplish in such a short time,” said Siddiq Farid, Smart Crowd Co-Founder. “Our aim to bring young professionals into the fold of real estate investing is what drives our success. This award is proof positive that our hard work is allowing us to to achieve our goals.”

“This year, competition for the Fintech of the Year was award impressive,” said panel member Shane McGinley, editorial director, ITP “Smart Crowd has come on the scene at exactly the right time, bringing a new and innovative way of thinking about investments to the real estate market. The award recognises not only their technology, but also their success in unlocking investment opportunities for young people.”

The 2019 Arabian Business Technology Awards will take place at the Jumeirah Emirates Towers Hotel on Sunday, March 31.

About Smart Crowd

Smart Crowd is a digital real estate investment platform which provides the opportunity to buy and sell shares in properties, reducing barriers to entry to low-middle income households to build financial assets and generate investment income. Smart Crowd caters to most people who find it hard to get on the property ladder to build a diversified portfolio and “unlock their wealth potential”.

In April 2018 Smart Crowd became the first and only financially-regulated digital investment platform in MENA. We provide users with active share management, transparency in their property investment, low investment cost and very low minimum investment levels.

 Smart Crowd Limited (Smart Crowd) is regulated by the DFSA. Smart Crowd’s Licence is a restricted ‘Innovation Testing Licence’ and it is restricted under the DFSA Licence to testing its platform. Due to the limited nature of its Licence, normal Client protections may not apply and Clients may have limited rights if they suffer as a result of taking part in testing. 

Smart Crowd is part of the region’s only fintech accelerator, DIFC’s Fintech Hive, and has won numerous awards including Accenture Innovation Award at GITEX 2017, Sharjah Entrepreneurship Festival Pitch competition, and Smart Dubai’s Global Blockchain challenge.

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LinkedIn

For more information:

Ananda@theshakespeare.agency +971(0) 50 296 0503

Inflation and overall costs

Financial independence starts with financial literacy.

Educating yourself on achieving financial independence starts with financial literacy. One of the key aspects to achieving financial literacy is not only to learn from experts in the field but question old and tried methods and explore what financial independence means to you. While investing in stocks and bonds can be one form of financial investment, there is a growing need to diversify into other asset classes such as real estate. Zach Holz of finance blog The Happiest Teacher shares some of his insights here

LuxHabitat Talks – Crowdfunding is the future of real estate

Smart Crowd CEO, Siddiq Farid speaks to Aneesha Rai for an edition of Luxhabitat Talks to discuss how real estate crowdfunding is changing the property landscape in the UAE. Find out how Smart Crowd came to be from its inception in 2017 to being selected as 1 of 12 Fintech start-ups based in the inaugural DIFC accelerator – the Fintech Hive. Smart Crowd is the first financially regulated real estate crowdfunding platform that aims to democratize real estate for everyone! Listen to the full interview here. 

Why it could be the best time to buy a home in Dubai

Here’s why landlords across Dubai are being more flexible than ever before when it comes to prices, rent-free periods, and payment terms making it one of the best times to be a tenant. Our investment director Jake Wright has his say on alternative income structures in addition to short term rental agreements that can secure tenancy. Read more on Khaleej Times.

Smart Crowd completes funding for Marina Quays holiday home!

Smart Crowd is very pleased to announce we have completed funding for our third investment property at Marina Quays with 35 investors! Developed by Emaar in 2008, the property is a one-bedroom holiday home located minutes from the bustling JBR beach. This was an exciting opportunity for investors as the property is already rented out and managed by HiGuests – a premium property management company. The average investment made was AED 24,000 , with expected ROI of 8.11% on dividends. Learn more about our future investment opportunities at www.smartcrowd.ae.

Dubai a Top destination for international retailers

Dubai – A Top Destination For International Retailers

The global retail landscape has undergone monumental changes in the last few years. From integrating innovative technologies to evolving with the changing consumer, the retail industry is redefining itself. Riding on such waves of change are creating new markets and economies which are not only gaining traction from the retail players but also shaping up to be the retail destinations of the future. One such rising retail market in the world today is in Dubai. In the last few years, UAE has developed as a key player in the global retail market. Of its major markets, Dubai particularly has been a topic of research among experts. Dubai has found itself in the list of top 100 retail destinations of the world with major international retailers foraying into the Middle East through this international city. And there are plenty of factors that are responsible for driving Dubai to be the next biggest destination for international retailers.

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