Do you know that in 2023 the United Arab Emirates real estate transactions were $172.6 billion, or Dh634billion? The 166,400 transactions have an annual growth rate of 20%. 

Does that make you think crowdfunding in the UAE will be the way to go?

Without further ado let’s explore the benefits of blockchain technology, and its platforms, and learn how it works. 

What is Real Estate Crowdfunding?

First, let’s define real estate crowdfunding. 

A large group can invest in property together. Crowdfunding platforms allow investors to pool their money online instead of having to spend a large amount on a home. 

It can be described as an investment in real estate where many investors invest under the umbrella of a single online platform. 

This method allows for individuals to invest in property projects with relatively small investments and without the need of direct property management. 

How Does Real Estate Crowdfunding Work?

This process begins with a website which connects people who are interested in investing money into real estate projects. These online platforms, or websites, act as a conduit to connect investors with real-estate developers who require funds for their project. 

Then, as an investor, you can browse through the website to find a project of interest. Often, it requires less of an investment. Sometimes, as little as a couple hundred dollars. To get started, the funding goal is to reach a certain level of money. Once the project has enough investors, it is ready to begin. 

Shortly, crowdfunding real estate allows you to invest without purchasing a property. You can invest a small sum and make a return if the project is successful. 

Types of Crowdfunding for Real Estate:

 Real estate crowdfunding can be classified into three types. 

Equity Crowdfunding

It allows you to raise funds for real estate investments. Investors receive a percentage of the ownership. They can become part owners. Investors can earn rental revenue and also a part of the profit if the property is eventually sold. The return an investor receives depends on the performance of both the real estate market and the investment property.

Equity crowdfunding offers high returns on investment, but comes with higher risks because investors are directly involved in the success or failures of the property. 

Debt Crowdfunding 

Debt crowdfunding can also be called peer-topeer loans or real-estate loans. Investors are able to lend money directly from a developer or property owner. The investors don’t own the property, but they do earn interest from the loan. 

A loan contract will state that the loan is secured with a property and that the investor receives their principal as well as interest over a certain period of time. 

It has lower returns but is also less risky than equity crowdsourcing. Investors receive priority over equity holders for repayment in the case of financial hardship. 

Rewards-Based Crowdfunding:

This type of real estate crowdfunding is much less common than either of the other two. In rewards based crowdfunding, investors provide money for a specific project in exchange with non-monetary benefits. The rewards can be anything from early access to special recognition, gifts or property. 

Rewards based crowdfunding is used for creative real estate projects or those driven by a community, where the main goal is to support a concept or cause rather than make monetary gains. This type is for creative real-estate projects or community-driven initiatives, where the primary goal is to support concepts or causes rather than making monetary gains. 

Real Estate Crowdfunding: What Are the Benefits?

 Here are the top benefits of investing in real estate crowdfunding to help you understand it.

Diversified and increased options: 

Real estate crowdfunding allows for a wide range of investment possibilities that otherwise would not be possible. Investors are able to select from a range of residential, mixed-use or commercial projects in various geographic locations. Diversification allows for investors to spread their investment over several projects, reducing risk. Investors can reduce risk by diversifying their portfolio.

Marketing Opportunity:

 This can be an extremely valuable tool for developers and real estate agents. Listing their projects on platforms allowing crowdfunding allows them to reach a wider audience. The project may be unknown to investors. Exposure gained by a company can build its brand and reputation. Successful campaigns can generate interest and buzz, which may lead to traditional investment. 

Take advantage of your network to learn:

 Many crowdfunding platforms bring investors and real estate professionals together. This network is an excellent resource for exchanging ideas and learning about new ones. Investors gain valuable insights about the real estate industry, investment strategies, as well as best practices, by interacting and exchanging ideas with other investors. This collaborative environment allows investors to gain knowledge and improve decisions. 

Potential for high returns

 Investors can expect to earn high returns on equity crowdfunding, notably when they receive rental income or appreciate the value of their properties. Only successful projects can bring significant profits. Real estate crowdsourcing is popular for its potential to generate high returns. 

Accessibility and affordability

 Another benefit of crowdfunding real estate is its accessibility. It allows investors relatively low investment amounts, unlike traditional investments in real estate, which require large capital. Because crowdfunding is so affordable, it allows people with limited financial resources to invest in property. This allows for more people, even those without financial means, to invest in real estate. 

Easier investments: 

Not to be overlooked, these platforms tend to be easy to use and straight forward. Investors are able to search for projects online, receive detailed information, see financial projections and even make investments in a matter of clicks. Platforms are often responsible for administrative tasks, such as collecting payments, distributing prizes, and updating investors on the progress of a project. It’s easy to use. Investors can easily manage their investment, without having to become involved in the management of the property. 

Best Platforms for Real Estate Crowdfunding

SmartCrowd: 

It is an UAE-based platform for real estate crowdfunding. Investors can invest in real-estate projects like rental homes to increase their wealth. SmartCrowd provides a transparent, user-friendly platform for investors to search through real estate listings, view detailed property information and make informed investments. This is a platform registered under Dubai Financial Services Authority. This platform focuses on providing access high-quality real property assets that can be used to generate rental income or capital appreciation. Smart Crowd offers an investment of $500 in real-estate. 

Stake: 

Stake is also known as GetStake and is another Dubai based platform which focuses on fractional property ownership. This method is less time-consuming and has lower entry barriers. Stake emphasizes the importance of transparency by providing detailed data and analysis about each property. This includes financial projections and trends in the market. Investors can diversify portfolios through the platform by investing in different properties. It can also lower the risk and increase the potential return. 

Aqarchain: 

Aqarchain aims at revolutionizing the real estate industry with its first decentralized Blockchain-based crowdfunding platform. They provide investors with a safe and transparent method to purchase and sell shares of real estate assets. Aqarchain is often used to tokenize properties. You can call Aqarchain a pioneer for non-fungible tokens (NFT). Aqarchain’s best feature is that it allows you to acquire even 1 square foot of real estate.