UAE residents – both nationals and expats – will soon be able to take active part in the real estate boom playing out in the domestic market, and also in the Indian market, investing very little amount, with hBits, which is spearheading fractional investments in high yielding real estate assets in India, set to expand its operations to the UAE.
Billed as a pioneer in this field, the company will enable retail investors in the UAE to be part-owners of high-end, multi-million dollar residential and commercial assets in Dubai for as little investment as $30,000 through its AIF (alternative investment fund).
As for investments in commercial real estate assets in India – mostly Grade A office assets – UAE retail investors can invest in hBits’ soon-to-be floated AIF in India’s international financial services centre – GIFT city.
Following a recent decision by India’s market regulator SEBI (Securities and Exchange Board of India), small and medium real estate investment trusts (SM REITs), which enable fractional ownership in real estate assets, are expected to be soon listed on Indian stock exchanges.
“Unlike large REITs, which are like mutual funds (MFs), SM REITs are like individual stocks, which allow investors to pick and choose real estate projects – whether specific projects in commercial or residential – for investments,” Shiv Parekh, Founder and CEO of hBits, told Arabian Business.
“So each individual investor [in the UAE] will know exactly which fancy villa or luxury apartment he or she partly owns,” he said.
Parekh said retail investors can exit anytime, just like how they sell their shares or units of mutual funds.
“The entire fund will be closed when the asset is sold,” he said.
hBits to open office, explore partnerships in Dubai
Parekh said hBits plans to open an office in Dubai soon to expand its operations into the UAE.
He said the company is also exploring partnership opportunities to fast track its growth plans in the UAE, and is already in talks with “a couple of developers and distributors” for it.
“The kind of bull run the real estate sector [in Dubai] is having for the last few years, we see huge potential for investments in that market.
“Besides, we already have a lot of expat Indian investors from the UAE and the region in our existing funds in India, and therefore we hope to have a head start once we start operations in that country,” he said.
The hBits top executive said the company is now looking to expand its investor base to include foreign investors in a big way, and its proposed plans for floating AIFs in India’s international financial services centre – GIFT city – and in the UAE are aimed at that.
“Through our GIFT city AIF, we will also be able to invite certain tax breaks for global investors who will be investing in property assets in India,” he said.
Non-resident Indians (NRIs) account for more than 30 percent of hBits’ investor base currently, with a sizable chunk of them being from the Gulf region.
Parekh said the company will be holding roadshows in cities such as Dubai and Abu Dhabi in the UAE, and Saudi Arabia, Oman and Kuwait in the region for raising investments for its proposed AIF for investing in UAE real assets, and also attracting investors for its GIFT city AIF.
To invest in residential, commercial assets in Dubai
Parekh said though hBits typically invest in commercial assets – mostly Grade A office projects – in India, considering the surge in growth in the Dubai real estate sector, it will also be investing in residential assets there.
As for its investment plans in Dubai and the UAE, the hBits top executive said the company will float a Special Purpose Vehicle (SPV), and all investments will be routed through an escrow account.
“This makes the transaction very transparent. We also work with the best law firms in the country and IPCs (international property consultants) to help us with third part due diligences,” he said.
“The investment will range from $6 million to $10 million for every asset that we purchase, and we will invite investors with investment amounts starting $30000 to own the property fractionally with other investors,” he said.
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