How co-owning real estate eases the burden on property investment

The model is advantageous as it provides access at a lower entry point and helps owners share costs

Choosing co-ownership over buying an entire property offers many financial advantages. Getty Images
Powered by automated translation

Co-ownership is an investment model that allows several buyers to share an ownership interest in a piece of real estate.

This innovative approach not only enhances market sustainability but also redefines the real estate landscape by making properties – especially premium ones – more accessible.

As rents in Dubai have recorded a citywide average increase of 7 per cent, the co-ownership model represents a modern, sustainable way for people to partially own premium properties.

Your name is included on the title deeds when you purchase a one-eighth share of a property. This type of ownership also allows you to spend time in the unit or rent it out, leveraging your investment.

In co-ownership, all parties are listed on the property’s title deeds, meaning each owner holds a specific percentage of the unit.

Such transparency ensures investors understand their rights and responsibilities, fostering a stable investment environment.

It is the property broker’s responsibility to ensure the management of every property, with a dedicated home manager supporting owners in scheduling, management, special requests and other related issues.

Co-ownership is particularly advantageous in the luxury real estate market as it provides access at a lower entry point. This market offers robust investment opportunities in the UAE with significant potential for capital appreciation.

By focusing on properties that represent the top 1 per cent of the market, investors can secure locations that remain in high demand, maximising returns and safeguarding against market fluctuations.

For instance, in Dubai, where the real estate sector is thriving, co-ownership is particularly compelling due to the city's economic growth and potential for property value increases.

When purchasing an expensive asset, such as real estate, co-ownership can be advantageous because it allows you to share costs such as insurance, fees or taxes.

Co-ownership may also relieve some of the burdens of managing an asset, such as a property, by sharing the associated responsibilities among a number of parties.

Choosing co-ownership over buying an entire apartment offers many financial advantages.

Lower entry costs mean you can start investing in an apartment and become an owner with a smaller initial investment.

For example, with a starting price of Dh200,000 ($54,458), you can invest in a premium property and become a co-owner.

This arrangement also allows you to save on holiday expenses since owning a piece of a high-end property prevents spending thousands on resorts or short-term rentals. Instead, you build equity in an asset that may increase in value.

Additionally, investors can spread their funds across several properties, thereby reducing risk and increasing potential sources of rental income.

For the price of one property, you can buy eight and diversify your portfolio, minimising risk.

Many second homeowners rent out their properties when not living in them and use the income to offset expenses.

Co-owning residences, especially premium ones, results in higher rental yields, particularly in a market like Dubai, known for its appeal to affluent tourists and business travellers.

Co-ownership also provides a steady stream of passive income through rental returns, with less personal management required, primarily when handled by a broker.

With an average return on investment of about 10 per cent, co-ownership stands out as a lucrative model for wealth creation.

It offers the same opportunities to build equity and generate income as owning an entire property, but with reduced financial strain.

This model allows individuals to partake in the premium real estate market, enjoy potential rental yields and build wealth through appreciating property values.

Istvan Juhász is co-founder and chief executive of Shard

Updated: May 22, 2024, 4:00 AM