The UAE is facing a good problem: Its real estate market is booming, and there is a shortage of buyers. Dubai rents in 2024 jumped 23% year-on-year back up to pre-pandemic levels, and sales are up 18%, according to Deloitte, and this upward trend is set to continue for the coming years.
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 was led by Middle East Venture Partners with participation from Aramco’s Wa’ed Ventures, and private investment platform Republic.
The company is bringing its fractional property investment platform to the UAE capital next year with expansion in Saudi Arabia in the next few months.
For Abu Dhabi, backing companies like Stake, which make it easier for people to participate in the real estate market by buying a share of a given property, is a good approach to boosting investment in its real estate market. The Emirate has burgeoned over the years into a residential hub for people who work in Dubai but find living in that city too costly, and it also ties in nicely with Abu Dhabi’s long-term plan to diversify its revenue streams away from oil and gas production.
Stake’s process is simple for property investors. It lets you buy a share in a property that it manages on behalf of shareholders and lets you earn a slice from the monthly rentals. If the property gets sold, the investors get a share of the profit as well. Stake also lets investors sell their stake in a secondary market called Exit Windows that it opens up every six months.
Founded by Manar Mahmassani, Rami Tabbara, and Ricardo Brizido in 2020, Stake aims to use the new cash to fuel its international plans — the majority of the money will be used to enter Saudi Arabia in the next few months, and to expand to Abu Dhabi next year. Some of the money will also be used to offer more options in Dubai, like investing in commercial real estate. The startup has raised a total of $26 million to date.
Currently, Stake has more than 200 properties under management with investors from across the globe. The UAE is home to most of its customers, and people from Saudi Arabia and Kuwait form the bulk of its international customer base. About 12% of its customers are from the U.S., Canada, and the U.K.
Stake has been planning to expand beyond Dubai for a while now — it had originally announced its entry into Saudi Arabia and Egypt in 2022, but deferred those plans citing economic volatility. Earlier this year, the company partnered with U.S.-based private investment platform Republic to attract more overseas investors.
And to entice more international investors, the startup, in partnership with the Dubai International Financial Centre (DIFC), offers investors who commit at least AED 2 million (~$545,000) a golden visa (a 10-year renewable residency visa) in Dubai. That program was introduced in 2019 to attract foreign investment into the region, and initiatives like this have reportedly helped foreign nationals drive real estate investments in the region.
The company says it returns roughly 4%-7% to its customers through rental income. Tabbara, who serves as co-CEO with Mahmassani, told Madconsole that the company has paid $4.5 million worth of rental income to its customers so far. He added that the average investment in properties comes to $1,500, and on average, customers invest a total of $5,600 through the platform.
Entering Saudi Arabia
Stake claims it has surpassed Dubai-based fractional property investment platforms like Smartcrowd, but it will be starting afresh in Saudi Arabia.
Saudi Arabia already has companies like Awaed and Aseel, which let customers invest in properties through funds. Historically, only Saudi nationals have been able to have freehold ownership of properties in the country. Property investment companies therefore set up special purpose vehicles through which they let investors buy real estate.
“Saudi Arabia has properties that are recently completed and under development that are worth billions. We are going to use [our] experience to offer a similar unified product for investment in Saudi Arabia within the same app,” Mahmassani said.
Mahmassani noted that Stake aims to break even in Dubai by the end of this year and be profitable by next year. The startup is also exploring partnerships to let people from the Middle East invest in properties in countries like the U.S.
