Dubai-Based Fintech Startup Stake Is On A Mission To Democratize Real Estate
Dubai-based fintech startup Stake offers a simple and accessible approach to investing in real estate properties in the UAE.
Dubai's real estate sector continues to grow, with the annual transaction report issued by the Dubai Land Department showing that the industry has recorded more than 84,000 property transactions worth a total of AED300 billion in 2021. This is an indication of how the real estate industry remains a tangible and stable asset class in the UAE, and as such, one digital platform wants to empower people to invest as much as they want to in real estate properties. That's the premise of Stake, a Dubai-based real estate investment platform, wherein, for as low as AED500 (approximately US$130), its users can start investing in real estate properties, without having to buy it themselves, or spending a substantial amount of capital.
Launched in January 2021, the Stake platform was founded by Rami Tabbara, Manar Mahmassani and Ricardo Brizido. The co-founders boast impressive backgrounds: Tabbara, co-CEO, was a former Senior VP of Sales at Damac Properties and has worked for over 15 years in real estate, Mahmassani, who is also the co-CEO, has more than 15 years of experience as an investment banker at Deutsche Bank and Falcon Group, while CTO Brizido is a tech wizard known for growing digital-enabled businesses, with the most recent of them being equity crowdfunding platform Seedrs. According to the trio, they were prompted to launch Stake after realizing a gap in real estate investing in Dubai.
"[There was] no transparent and easy way for investors from all over the world to participate in the Dubai property market." Tabbara says. "The MENA region has a huge affinity to real estate, but there are many barriers that prevent everyday investors from participating in this asset class, such as the high cost of entry, lengthy paperwork, opaque pricing, and overall clunky transactional process. Stake solves all these issues." The team started working on the business during the COVID-19 pandemic, with the licensing process for the enterprise taking around nine months. Today, it's registered in the Dubai International Financial Center (DIFC) and is regulated by the Dubai Financial Services Authority (DFSA).
With a vision to empower everyone to own and build wealth through real estate, the team prioritizes developing a simple, transparent, and hassle-free process for its users. This begins by identifying the best properties in the market- Mahmassani explains that the company is currently focusing on Dubai, but that other locations like the UK and KSA are in the offing. If a property meets Stake's initial acceptance criteria, the team carries out a rigorous due diligence process, supported by its in-house proprietary machine learning model, developed in collaboration with the Massachusetts Institute of Technology (MIT).
Based on this analysis, Stake negotiates a price with the seller. After an asset is selected, it is put up on the platform for anyone to buy shares in it at costs as low as AED500. "A key condition in our selection process is that the property is already rented, and therefore, delivers a steady income stream for investors from day one," Mahmassani explains.
"The real estate market can be quite opaque, so we are big on transparency, that's why we provide all the data you need to make an informed investment decision, including an info memorandum, financial projections and a third-party valuation report." And once a user picks a property and decides how much they want to invest, the combined capital investment from other investors will go into a segregated bank account until the capital meets the target purchase price.
Finally, when a property is 100% funded, Stake buys the asset through the use of a DIFC-based special purpose vehicle (SPV). "The SPV then becomes the new owner of the property, and every investor who participated gets issued shares in the SPV proportionate to their investment amount," Mahmassani says. "For example, if you invest $20,000 in a property worth $200,000, you will own 10% of the property, and therefore, you will have a right to 10% of the rental income from the property, as well as 10% of the profit from appreciation in the value of the property."
If the property is acquired, Stake handles all operational matters such as upkeeping and managing tenants- investors can simply receive monthly dividends from rental returns in their Stake wallet, which they can either withdraw, or invest in other properties on the platform. Finally, depending on the target hold period, when it comes to the exit process, Stake will manage the sale process as well.
Talking about hurdles that they've faced building Stake, Tabbara gets candid in pointing out that the biggest challenge they've encountered was raising awareness about the enterprise, especially within the region's booming fintech space. "With so many fintech companies being launched in the UAE and in the region in general, it becomes harder to reach consumers, especially on the B2C side," Tabbara says.
"When we realized we had to be different and "louder,' we focused heavily on our marketing, branding, and technology offering to differentiate us over others in the market. We knew that if we were successful in those three channels, we would be able to grow and scale our userbase."
The team also capitalized on their unique selling point, which, according to Tabbara, is their speed. "In our first year, we were able to achieve many firsts in the industry," he explains. "We were able to sell the highest value crowd-invested residential unit in the MENA, release the first and only digital real estate investment app, and be the first digital real estate investment platform to get Shariah certification. All of these would not have been possible if not for speed." For this, he commends his team. "We were able to put together a team that is highly experienced in real estate, finance, technology, and marketing," he notes. "These strengths have allowed us to be better and different than our competitors."
And Stake's strategy seems to have worked out well: according to Mahmassani, in its first year, the enterprise has listed more 17,000 customers from 30 countries and over 100 different nationalities. "We completed a total of 30 property investments on the platform, and reached $10 million in assets under management," he points out.
Stake has also signed a partnership with regional media conglomerate MBC Group that allows the former to leverage the latter's digital platforms and channels, while the release of its app (available for iOS and Android users) marks its shift to becoming a mobile-first product as well. The startup has gained the interest of investors too- last year, Stake closed a $4 million seed round led by Combined Growth Real Estate. The lead investor is a company led by Amer Hammour, who is the founder and Chairman of Madison Marquette, a US-based real estate investment management company with $6 billion of assets under management. Other participants in the round include Dubai-based private family office Vivium Capital, UK-based Verve Ventures, KSA's Lama Holding, Saudi angel investor Mishaal Alireza, as well as the shareholders of the UK's Chalgrove Properties Limited.
As for what's next, Brizido says that he and his team are focused on rolling the Stake mobile app across the MENA region, which they also plan to use as a launchpad to move into new markets, starting with Saudi Arabia later this year. At the same time, they have an ambitious long-term goal for Stake, with Brizido saying, "Our target is bringing the Stake investment platform to another level- focusing mainly on the automation where our investors can select an investment strategy, and we would automatically diversify their holdings across different properties and geographies."
The Stake team also aim to bring down the barriers for liquidity by building a secondary market to enable users to sell their "stake" in a property to others in an efficient and cost-effective way. And the end goal? "To be the leading fractional ownership platform for real estate in MENA," he says. "We have a very ambitious team, and we see ourselves solving many of the problems and pain points across the real estate capital stack, evolving into a marketplace with multiple products and scaling through digitization and mass accessibility."
'TREP TALK: Stake Co-Founders Rami Tabbara, Manar Mahmassani, and Ricardo Brizido Share Their Tips For Aspiring Entrepreneurs
It's now or never "The COVID-19 pandemic has accelerated so many changes in our everyday lives. The hyper-digital world we live in is turning whole industries on their head, and the pace of change is more rapid than ever. With this backdrop, a higher than usual percentage of people are open to trying new things. If you've found a problem that is big enough and a purpose that is worth being persistent about, it has never been a better time to innovate and try to crack it. So, go out and do it!"
Risk leads to reward "Starting a business is a high stakes game, a rollercoaster ride that challenges your deepest convictions about yourself and your business. Remember that it's hard for a reason, if you get it right, the highs make up for everything else. So, play the game knowing that the volatility is all part of the process. Be willing and ready to push yourself to new limits, and savor the great moments when they come."
Experimentation is part of the process "In so many cases, the path you set out to take ends up being very different than your original plan. Your assumptions get stress-tested, and that's why it's so difficult to build at the same time as you're learning. A fascinating part I find about building a business is that when you set out on a certain direction, you don't know what's on the other side, or even along the way. It's really a thrilling adventure in that you see all sorts of new pathways open up that you had never thought of before. So, be quick on your feet and flexible. Iteration is part of finding what works. And always have a bias for action. Shipped is better than perfect!"