The United Arab Emirates faces a major problem: the real estate market is booming and there is no shortage of buyers. According to the data, rents in Dubai in 2024 increased by 23% year-on-year, returning to pre-pandemic levels, while sales increased by 18%. Deloitteand the upward trend is proceed for years to come.
No doubt some of that demand is spilling over to neighboring Abu Dhabi, which is likely 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 contributing its fractional wealth to the platform investment to the capital of the United Arab Emirates next 12 months.
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 latest money to advance its international plans – most of the money can be used to enter Saudi Arabia in the next few months and expand to Abu Dhabi next 12 months. Some of the money may also be used to offer more options in Dubai, similar to investing in industrial real estate. The startup has raised a total of $26 million so far.
For Abu Dhabi, supporting corporations like Stake that make it easier for people to participate in the real estate market by purchasing a share of a property makes sense to increase investment in its real estate market. Over the years, the Emirate has change into a residential hub for individuals who work in Dubai but find it too expensive to live in the city, and it also matches well with Abu Dhabi’s long-term plan to diversify its sources of oil and gas revenues.
The Stake process is easy for real estate investors. It allows you to purchase shares in a property that it manages on behalf of the shareholders and allows you to earn a portion of the monthly rents. If the property is sold, investors may also receive a part of the profit. Stake also allows investors to sell their shares on a secondary market called Exit Windows that opens every six months.
Currently, Stake manages over 200 properties with investors from throughout the world. The United Arab Emirates is home to the majority of its customers, and the majority of its international customer base is made up of residents of Saudi Arabia and Kuwait. About 12% of consumers come from the US, Canada and the UK
Stake has been planning to expand beyond Dubai for some time – it originally announced it will enter Saudi Arabia and Egypt in 2022, but postponed these plans, citing economic instability. Earlier this 12 months, the company established cooperation with the Republic private investment platform based in the USA attract more foreign investors.
To attract more international investors, the startup, in partnership with the Dubai International Financial Center (DIFC), is offering investors who contribute at least AED 2 million (~$545,000) a gold visa (10-year renewable residence visa) in Dubai. This program was introduced in 2019 to attract foreign investment to the region and such initiatives are reported to have already yielded results he helped foreigners to lead real estate investments in the region.
The company says it returns roughly 4-7% to its customers through rental income. Tabbara, who co-founded Mahmassani, told TechCrunch that the company has paid out $4.5 million in rental income to its customers so far. He added that the average real estate investment is $1,500, with customers investing a total of $5,600 through the platform.
Entry into Saudi Arabia
Stake claims to have outperformed Dubai-based fractional real estate investing platforms similar to Smart Crowdbut in Saudi Arabia it is going to start again.
Companies similar to Awaed and Aseel already operate in Saudi Arabia and allow clients to invest in real estate through funds. Historically, only Saudi residents could own property in the country. Therefore, corporations investing in real estate create special purpose vehicles through which they allow investors to purchase real estate.
“Saudi Arabia has recently completed and developed properties worth billions. We will use it [our] experience in offering a similar, unified product for investments in Saudi Arabia within the same application,” Mahmassani said.
Mahmassani noted that Stake goals to break even in Dubai by the end of this 12 months and achieve profitability next 12 months. The startup is also exploring opportunities for partnerships to enable Middle Easterners to invest in real estate in countries similar to the US