Crowdfunding real estate investment is fast gaining popularity in the United Arab Emirates and some other countries in the Middle East. Most schemes are being run online, and investors can sign up on the website of the company managing the scheme.
The attraction? Investors can stake as little as US$5,000 in big residential and commercial property projects launched by brokerage and development firms.
Though investors don’t own the property outright through such investments, they own a small share of it which increases in value with equity growth. For borrowers, it is a fresh source of capital. For investors, it is a kind of gamble - though certainly that word would never be used.
Crowdfunding may well be emerging as a powerful financial tool, as capital markets are largely underdeveloped in this region, experts believe. As an estimate, nearly 30 dedicated real estate crowdfunding platforms currently exist in the Middle East.
The latest firm to announce its plan to launch a crowd funding scheme is DURISE.
"While an investor may not be purchasing their own property outright, it is a first step to owning a percentage of a property along with other investors via a crowd funding platform... The makeup of the Middle East is overwhelmingly young, which translates into technology savvy investors who are comfortable with technology and the concept of crowdfunding," the company said in a statement.
Overall, the money raised by crowdfunding platforms was nearly US$5.1 billion in 2013, up 81% from the previous year, according to a survey.