Think to the Dubai real estate market crash in 2008. While the market fell for a multitude of factors including overspeculation and investors’ short-term liquidity, arguably some factors included a lack of transparency between investors and developers and an inability of developers to raise sufficient capital to continue their projects.
Now imagine a platform that aims to help developers raise the capital they need, opens the opportunities for investment more broadly than a select few of high net worth individuals, and improves the transparency and reporting in the real estate industry.
Meet Hubster Aakarshan Kathuria, co-founder of EstateUp with partner Nilesh Jadhav. EstateUp is a crowdinvesting platform connecting real estate developers to common investors as minor shareholders of the property projects in the UAE and India markets.
In the traditional industry, when a developer purchases land, he begins off-plan (before construction) sales of units. This basically means the investment size is extremely high and prohibitively expensive for many people: on average, anywhere between AED 2,000,000-15,000,000 for a unit, in addition to agent and miscellaneous fees that fall around 6%.
EstateUp reduces the investment risk by opening the market to a larger pool of shareholders, whereby individuals like you and I can become equity partners and not unit owners. In this model, the average investment size is around AED 150,000-AED 200,000 with expected returns of 12-18% on a per year basis, based on current market information. Investors maintain limited voting rights, but receive regular reports and updates curated by EstateUp on the progress of the property development. Only projects that have been vetted by an independent law and audit firm are published on the platform, so as individual investors you can feel more confident in the opportunities before you.
Similar to the Kickstarter model that inspired the EstateUp team, only projects that reach their full funding goal commence construction. And, in case you’re wondering, EstateUp as a company doesn’t get into collection of the money. Their model incorporates an independent fiduciary and a project manager so that the fiduciary holds the funds and controls escrow of the development. Investments are actually carried off-line. The first 10% of payments from crowd investors are withdrawn at the time of commitment, and when the project reaches its full funding goal, the remaining 90% is drawn down in stages. If a project fails to raise sufficient capital, the money is returned to the investors. Investors do not incur any fees; EstateUp earns its revenue through a percentage of the funding goal charged as well as a registration fee from the developers.
Pretty impressive concept for a 24 year old former pilot brokering real estate deals on the side for the past few years, eh? Aakarshan was born in Dehli, India, and moved to Dubai at the age of 7. He graduated from Leeds University with a Bachelor’s in Aviation Technology. You can get in touch here, or pass by the Hub to say hello to him. The team has been selected as one of 13 teams to represent the UAE at the exclusive Web Summit in Dublin, Ireland in November. They are currently looking to expand their team and are seeking design and programming geeks, auditing and sales persons, and investors for mentors as well as to secure the kind of funding such that they can obtain a license to internally manage the investment funds.
Website – www.estateup.com
Facebook – RealEstateUp
Twitter – TheEstateUp
Instagram – theestateup
Youtube – TheEstateUp