Modern Markets

The real estate sector is expected to evolve in an interesting way in Abu Dhabi in 2023-2024 following a series of developments which are likely to affect the property market, including the introduction of the UAE’s golden visa program. The most prominent pattern is the arrival of wealthier or highly-skilled expats, mainly from Asia and Europe, who will change the demand side of the market for midrange to high-end residential units in the UAE and its capital Abu Dhabi.

The country’s property developers who have been through many ups-and-downs since the turn of the millennium are bracing themselves for yet another fateful period. This seemingly perpetual cycle of boom and bust, however, may be about to end as digitalization enters the scene, acting as the missing stabilizing force in the UAE’s property sector. There is good reason to believe that digitalization, and the advent of proptech, in particular, will make the sector more transparent, sustainable, and efficient in the long run. Proptech, in its simplest sense, is the use of IT-powered solutions to run the property market: in the downstream segment of the market, for example, this can come in the form of online listings, whereas in the upstream segment proptech can facilitate investments pooling, among much else.

For years, there have been a number of UAE-based online listing portals, which may be regarded as the earliest and most basic examples of prop-tech. Property Finder, established in 2007 and currently valued at over USD500 million, is just one example among many. The business has now expanded into the rest of the Middle East, North Africa, and also Turkey. Property Finder and similar services have evolved from mundane webpages which posted categorized notices to AI-powered platforms using sophisticated algorithms to show you exactly the right listings, sparing you from the task of browsing through an endless sea of announcements.

Such portals try to remain impartial by creating a win-win situation for both the supplier and the user: from the customers’ point of view, proptech has above all facilitated the process of house hunting, enabling them to land an ideal property, in the desired price-range, and with the right amnesties without the hassle of visiting the premises of too many real estate agents. The suppliers, meanwhile, are only too happy to see that the latency period is rapidly decreasing in length. This can indeed increase the occupancy rate of residential units and improve the market’s overall performance.

In addition to ramping up the speed of transactions in the market, online listings have also made marketing easier than ever. Several Emirati property portals are about to launch metaverse-powered 3D experiences of their finer listings, which can make marketing a truly straightforward matter. Hundreds of prospective buyers or tenants can now have a decent look at their property of choice at the same moment. The advantages of this approach in terms of sustainability seem obvious, especially in a city such as Abu Dhabi with a sizable expat population.

Even more ingenious proptech innovations are now shaping the market, especially in terms of financing. Financing, after all, is a crucial step in purchasing real estate, and one cannot say that the sector has achieved true digitalization without online financing.

Since around 2020, and thanks to facilitating regulatory revisions introduced following the COVID-19 pandemic, the UAE market has seen the rise of a number of proptech startups specializing in real-estate finance. Huspy is a case in point. Launched in 2020 as an online finance broker, the company has been growing rapidly—reportedly as fast as 30% month-on-month during a period in 2020. Huspy’s platform now pairs up its clients with the right lenders, mortgage brokers, and financiers across the country, according to Khalid Ashmawy, the startup’s cofounder.

Aside from these downstream solutions, which essentially help the end user, proptech is also playing a role in the upstream segment of the market. There has been a wave of startups offering apps that give everyone a chance to invest in real estate no matter how limited their capital. Such real estate crowdfunding solutions have found favor with independent investors in the UAE who now see no barriers of entry to the lucrative market of real estate development. STAKE is one such proptech innovation: the crowdfunding platform curates a list of attractive investment opportunities and lets individual investors have their desired share of the pie. The fact that all the paperwork and bureaucratic hassles are dealt with by the platform itself is yet another big draw for independent investors.

All this is likely to boost the volume of construction in the country by raising connectivity and transparency across different segments of the market. Thanks to the fast pace of information processing across the industry, the real estate market is now operating in a truly real-time manner, meaning the market will be more responsive to changes, while evolving in the best possible way.