Dubai’s booming real estate market ‘ripe for proptech disruption’

By Megha Merani

With Dubai’s real estate sector predicted to reach AED300 billion by the end of 2023, it’s no surprise that the UAE is already home to more than 55 percent of the 200 plus proptech startups in the Middle East and North Africa (MENA) region.

But proptech players in the Emirates believe there is still room for many more to tap into the scale of opportunity at hand.

“With Dubai's ambitious plans to double the population by 2040 to 5.8 million people, further residential supply will be required to meet the growing demand,” said Rami Tabbara, co-founder at fractional real estate investment platform Stake.

“Couple the growing market with a strong startup ecosystem, ease of business formation and low taxes, Dubai is ripe to be disrupted through proptech innovation.”

Property technology, or proptech, refers to the application of innovative technology in real estate to transform the way property developers, managers, landlords and brokers do business.

The global proptech market is projected to grow from $18.2 billion this year to $86.5 billion in 2032 at a compound annual rate of 17 per cent, a 2023 Future Market Insights report said.

Tabbara said Stake aims to multiply its active investor base tenfold to become a category leader in the UAE and Saudi Arabia.

Since launching in December 2020, Stake has collected a base of more than 220,000 registrants from 180 nationalities spanning across some 150 countries – with Indians among the top three biggest investors.

“In just two years, we’ve enabled thousands of investors to buy AED154 million worth of properties in Dubai and paid them over AED4.6 million in rental income,” Tabbara said.

“When looking at the nationalities of our investors who reside within the UAE, Indians feature within our top 3 nationalities. We’re also noticing a growing demand for Stake from Indians residing within India, giving them access to Dubai real estate, without having to leave their country.”

Tabbara added that fractional ownership of real estate is gaining traction around the world.

“With property prices in Dubai increasing month-on-month over the past few years, buyers’ affordability has been hit,” he said.

“For some, the 20 percent down payment for an investment property is simply not realistic. Innovation through proptech has enabled individuals to gain access to fractional ownership, from a small amount. This allows individuals to gain exposure to real estate as an asset class, without the heavy initial deposit.”

Dubai’s property market is expected to witness the biggest price growth in the world by the end of 2023, surpassing top cities such as Miami and Paris, a report by sustainable property developer ZāZEN Properties said this month.

The cost of prime properties is expected to increase 50 percent since 2021– a direct correlation to the overall increase in sales which crossed a total of AED 261 billion last year.

“Proptech in Dubai is still at an infancy stage with huge potential,” Vinayak Mahtani, founder of proptech vacation rental company BNBME Holiday Homes, said.

“There’s a lot of space to grow in terms of discovery, in terms of buying and selling, brokerage, maintenance and management. In North America, for example, there’s an app where if I’m driving down a street, it will show me a live view of which properties are available and at what price. We don’t have that in Dubai and that’s a sort of next level of development.”

BNBME manages hundreds of holiday homes across Dubai and India.

Mahtani said his company has seen 100 percent increase property acquisition annually in the last five years and recorded more than 250 percent digital growth on its platform with more than 30 percent repeat bookings.

The global short-term holiday rental market is expected to cross $256 billion by 2030, from about $100 billion in 2021, at a compound annual growth rate of 11.1 percent, a Grand View Research report said.

“The short-term rental opportunity in Dubai alone is huge – today, a mere four years after the short-term rental economy was licensed, nearly six percent of total residential freehold real estate in the city is a short-term rental,” Aahan Bhojani, founder and chief executive of Silkhaus, said.

“With the advent of Airbnb and similar distribution platforms, residential real estate globally is being utilized for commercial hospitality purposes.”

Founded in 2021, Silkhaus is a platform for short term rentals in emerging markets.

The company raised $7.75 million last year from Nuwa Capital, Nordstar, Global Founders Capital, Yuj Ventures, Whiteboard Capital and VentureSouq, along with some international family offices and proptech founders.

“The development of one of the world's fastest growing real estate sectors has spurred significant innovation in all segments of the market, from property management to sales and leasing,” Bhojani added.

“Proptech has exploded as a category, with talented entrepreneurs and teams now reimagining every touch point in the real estate owner and end user experience.”

The founder said the Dubai Land Department’s pioneering collection and use of data, which enables prospective owners, brokers and property agents to access real-time data and insights on transactional volume in the city, has also helped spur development of proptech solutions.

Proptech startups have raised more than $100 million in funding in the UAE over the past five years, according to Zoom Property Insights.

BNBME’s Mahtani, who advises startups in the space, warned however that founders looking to enter the city’s proptech sector must be well capitalized.

“Because although Dubai looks like a place where you can come in and make money right away, you have to have enough capital and runway before you can start generating cash,” he said.

The real estate industry has contributed to promoting comprehensive economic development in Dubai and is among the emirate’s most important sectors.

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