When Hatim Khan worked as a finance director with a brand franchise operator in Kuwait, he realised the investment potential of Dubai real estate because of the UAE’s tax-free income, strong currency, growing economy and prospects of securing a long-term property investor visa. But he soon faced challenges while buying a property in Dubai, especially because he was living outside the UAE.
“From making multiple trips to view available properties, opening a bank account, applying for a mortgage, completing the registration process and finding a tenant, I experienced the challenges first-hand,” Mr Khan recalls.
Although he went on to buy an off-plan property in Dubai in 2018 based on the advice of a real estate broker and developer, Mr Khan later realised his purchase would not provide the regular cash-flow he wanted.
“I wish I could have talked to someone who would suggest options based on my investment objectives, rather than push projects that made the highest commission for them,” he adds. “An investor has to navigate the labyrinth on his own, with no agency to guide him and protect his interests.”
This led him and co-founders Kazim Naqvi and Arpit Johari to launch PropInvest, a start-up that uses technology to simplify the process of investing in the Dh80 billion Dubai real estate industry for global investors. The company uses technology to provide analysis and market data, help investors execute the transaction and provide post-investment property management support.
PropInvest Tech was registered in the Dubai International Financial Centre in February 2021. The co-founders have rolled out a website and will launch an app soon.
The platform connects Dubai house buyers with multiple agencies involved in the complete lifecycle of a real estate transaction. These agencies include brokers, developers, mortgage consultants, banks, tenants, property management companies, interior designers, repair and maintenance companies, among others.
“We are a single point of contact and local representative for the investor, who might be a UAE non-resident,” says Mr Khan, who is also the chief executive of PropInvest.
Property sales transactions in Dubai are on an upward trajectory as the UAE economy recovers steadily from the Covid-19 pandemic. Last month, the emirate registered 5,780 sales deals worth Dh14.97 billion ($4.07bn), making it the best August in total sales since 2009, according to the listings portal Property Finder.
The UAE property market, which softened due to a three-year oil price slump that began in 2014 as well as oversupply concerns and the impact of the Covid-19 pandemic, is showing signs of recovery as people upgrade to larger homes with outdoor amenities amid a remote working and learning trend sparked by the health crisis. Economic support measures and government initiatives – such as residency permits for retirees and remote workers, and the expansion of the 10-year golden visa programme – have also helped to improve sentiment.
While there are many property listing websites in Dubai, there is no property investment platform, Mr Khan explains.
PropInvest aims to bridge the gap between high-quality investment grade properties in Dubai and investors globally. It plans to do this by going beyond the transactional approach taken by brokers and consultants where the immediate deal takes precedence over the investor’s long-term financial objectives, he adds.
“Some of the common challenges faced by real estate investors in Dubai include navigating through a maze of property listings and brokers, scarce information on the financial aspects of the investment (cash flow, expected returns and key risk factors), mortgage eligibility, documentation, understanding the Dubai Land Department registration process, eligibility and application for a property investor visa, post-purchase leasing and ongoing maintenance, and correct time and price to sell,” explains Mr Khan, an MBA graduate from the Indian Institute of Management, Indore.
An overseas investor looking to purchase Dubai real estate typically browses through property listings on marketplace websites or contacts a brokerage. In both cases, the investor must deal with a broker “who might possibly upsell options irrespective of their requirements”, Mr Khan says.
Another issue investors could potentially face is the asset’s fair pricing. Since the broker acts on behalf of the seller, they might inflate the asking price and the investor might not be able to figure out the actual purchase price, he adds.
There is also a lot of paperwork involved in buying a property in Dubai, says the start-up’s chief executive.
“Apart from the standard purchase process paperwork, there might be other requirements for which the buyer might need assistance, such as mortgage approval and property-based visa application. At present, the buyer must deal with these multiple agencies alone,” Mr Khan points out.
Other potential issues include an information overload and no assistance after the purchase, according to Mr Khan. After browsing through thousands of options on property listing platforms, a buyer may need to do many viewings and deal with multiple brokers, which could be taxing, he adds.
Overseas investors also need a trustworthy agency that will take care of all the post-purchase management and hassles such as property management, tenant management, repairs and maintenance and other ad-hoc requirements, he says.
“We solve all the above problems by being a one-stop-shop for the investor, providing end-to-end support in the property purchase life cycle and by being the buyer’s local representative after handover,” Mr Khan explains.
The start-up also provides investors with grade A curated property options based on their requirements at a fair market price in an area of their choice in Dubai. The team conducts periodic market research and analyses multiple market metrics to fuel a business intelligence tool, which helps prospective buyers make the investment decision.
“We offer investors an idea of what the financials will look like if they invest in a particular property. We take a very conservative approach in our calculations (IRR, rental yield, capital appreciation). For instance, all the returns are calculated on the all-in price (including broker fee, DLD registration fees and other registration charges) rather than the purchase price. Our aim is to provide the investor with a complete picture without any hidden charges,” Mr Khan says.
The company will also optimise property visits so the buyer does not have to waste a lot of time viewing irrelevant options, he says. The team will also ensure the buyer pays a fair price for the property and will negotiate on their behalf if there is a price mismatch with the intrinsic value, he adds.
Besides assisting the buyer in paperwork, be it with a bank for mortgage approval, property-based UAE visa application and all the documentation required in the purchase process, PropInvest also provides them with periodic financial performance reports (through dashboards) that will help them stay updated about their investment and eventually decide the right time to exit the investment.
If the purchased property is vacant, PropInvest will try to source a tenant as soon as possible. After that, it will take charge of cheque collection, contract renewals, repairs and maintenance and property management in general.
The start-up does not currently charge the buyer a fee, but at some point it will levy a small charge, depending on the value-added services they provide, such as registering an Ejari or property investment residency, for example.
“We charge a flat fee, depending on the services provided, but since we are at a very early stage, we are giving a 100 per cent discount on these services to buyers,” Mr Khan says.
The company currently has a percentage-based partnership with service providers where it charges a connector fee on external partners such as banks, brokers, developers, property management companies and other parties. Once the platform integrates sellers, it will also charge them a listing fee.
PropInvest currently has more than 500 active users across the Middle East and India and has executed six property investments till date. Its user base has been growing 100 per cent month on month since the website was launched, he adds.
“While we are receiving a lot of investor interest, actual transactions have slowed down because of Covid-19. We expect a lot more investments once the Covid-19 travel restrictions are relaxed. Being a tech platform providing investment at the click of a button, we will be the first off the blocks,” the chief executive says.
The start-up has partnered with multiple real estate brokers, developers, banks, mortgage consultants and property management firms to assist investors across all service categories.
The PropTech company started with a team of three founding members and now employs six people. They expect the number of employees to increase to 10 in the next six to eight months, Mr Khan says.
“We are a bootstrapped start-up. We are currently focusing on developing our website, dashboard and app and growing our customer base. We will look for funding after we achieve some scale, which might be six months from now.”
Date started: February 2021
Founders: Hatim Khan, Kazim Naqvi and Arpit Johari
Size: Less than 10 employees
Q&A with Hatim Khan, co-founder and chief executive of PropInvest
What already successful start-up do you wish you had started?
Google. The way they have scaled and provided a basket of services while at the same time being ethical is something I have always admired.
What is your next big dream to make happen?
Take PropInvest global. Global investors should be able to buy, manage or exit property at the click of a button.
What new skills have you learnt in the process of launching your start-up?
In the past few months, we have realised the customer should be at the centre of everything. In bigger organisations, sometimes this gets missed. In a start-up, we all think and implement changes which are designed to make sure that an investor gets maximum value.
If you could start all over again, what would you do differently?
We would have started this company five years earlier.
Who is your role model?
Where do you see yourself after 10 years?
After 10 years, we wish to transform the current real estate transaction process in Dubai.