After the The Dubai Land Department’s (DLD’s) plans to implement a 'fractional title deed' concept across the emirate to attract investors to the hotel apartment segment, Lewis Allsopp, CEO of Allsopp & Allsopp speaks of the benefits and what to look out for.
“Fractional ownership allows an investor to buy a part, or a share, of the property, rather than buying the entire property. So for example, you could have an apartment that is split into four shares of 25%. In this case, the investor would own 25% of the property. This allows for the diversification and spread of an investment portfolio and it also allows for easier entry points for people to build investment portfolios in the UAE property market.”
“To start with we expect this to be implemented on serviced apartments, hotel apartments and with other commercial arrangements as this is the easier entry point to the market and it is simpler to structure the arrangements. In time, we may see this cross over into the residential sector but this isn't as easy a transition. The other important factor is that most buyers on the residential side are 'end-users' - people looking to live in the property.”
“This concept does exist in other parts of the world and the rough principle is also there via REITS. So I think it's something that would have always come to the Dubai market at some point. This will make investment into real estate a lot easier, more affordable for people and should provide an overall boost to the market.”
“As we're at the very beginning of fractional ownership coming into the Dubai property market, I would recommend doing your due diligence on any possible investment as you usually would and to make sure you read through all of the paperwork to understand exactly how it will work where you are looking to buy. Consider how much control or input you have, how and when you will receive your returns, what management fees you will need to pay, how easy it is to exit the investment if you want to at any point and what your overall rights are.”