REAL ESTATE CROWDFUNDING 101
An Introduction to Real Estate Crowdfunding
In a layman’s term, crowdfunding means pooling money collectively from a group of investors to make an investment and gain returns depending on the percentage contributed. Accordingly, the same approach has been introduced to real estate for centuries now.
Husbands and wives and their parents and siblings collectively bought property, neighbours or institutions coming together to purchase a property and enjoying the investment returns as per the shares contributed. Relatively the same concept and approach is what nowadays, we call real estate crowdfunding.
With the help of technology and modernization, real estate crowdfunding has been enhanced over time with the use of online transactions and platforms which makes it easier for the investor to purchase a property as well as to fund the investment property through the internet.
Today, real estate crowdfunding allows investors to select, review, and assess properties through crowdfunding platforms, securely sign documents, transfer funds and have access to multiple data concerning the returns or gains in the pro-rated investment.
Ellington Properties introduced Eaton Place apartment for Crowfunding
Ellington Properties, Dubai’s leading real estate developer offering premium luxury apartments and townhouses continues to challenge the real estate market in Dubai by introducing a new concept to property investing and help small investors to build their portfolios before fully diving into a rental property.
Ellington Properties in partnership with SmartCrowd launched an opportunity to invest in one of the newly delivered projects in Jumeirah Village Circle, Eaton Place.
Eaton Place is the first luxury property in the platform that offers an above market average dividend yield of 7.21% with guaranteed rental returns of two years. From as low as AED 5,000, an investor can become a part-owner of a one bedroom apartment in the most-sought after locations in Dubai.
Contrary to the popular belief that premium residential properties generate low returns as the demand for affordable properties are higher for renters especially during these tough times. However, with Ellington Properties’ proven track record of 96% occupancy rates in all delivered projects in Jumeirah Village Circle, and a consistent all-time high tenant retention, the demand for high-quality residences are greater than the affordable ones as tenants tends to focus on the healthy lifestyle offerings and design quality of homes they want to live in.
In an investment perspective, Eaton Place guarantees a high rental return with minimal expenses to be deducted on the rental income as the property is new and all the amenities are in perfect condition, which further appeals to an investor to capitalize on.
Benefits of Real Estate Crowdfunding
As low as AED 5,000, an investor can invest in a property without the need to borrow extensively to start his/her real estate investment portfolio.
Regulated and transparent investment that uses a fully registered investment structure to support the investment scheme and allows investors to monitor results.
Easy and convenient way of investing with access to multiple investment properties through online and digital platforms.
Gain market insights on how property investment works, rental performances and market volatility prior to fully expanding into a full ownership rental property.
Allows portfolio diversification especially for big-time investors and helps reduce risk yet optimizes earnings.
Less paperwork and minimum time management as all transactions are done online from selection of properties, investment and payments to receiving dividends or shares.
An alternative to stocks with lower risk, as real estate is less volatile to the market situations especially during the global pandemic.
Direct reward-based concept that generates dividends from the rental income and capital gains on basis of appreciation value.
The Major Actor in the Middle East
Following the success of crowdfunding, also called tokenization in other global cities, the new investment scheme has paved its way in the United Arab Emirates, and creating a positive trend in the market, especially in the real estate sector.
Dubai, in recent years has been a major player in the real estate world, producing and generating higher rental yields compared to other metropolitan hubs, and offering prime luxury residences lower than other cities in comparison. And this tends to attract international investors as well as small-time investors to keep an eye for new opportunities in Dubai’s real estate market.
SmartCrowd, MENA’s first and only regulated real estate crowdfunding platform has been the major key player in real estate crowdfunding in the UAE and the Middle East. Registered in the Dubai International Financial Centre (“DIFC”) and regulated by the Dubai Financial Services Authority (“DFSA”), it provides investors to reap the benefits of a direct real estate investment while minimizing risks and offering an easy and convenient way to invest in a property.