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We are all well aware that real estate is one of the world’s largest industries, and the go-to investment choice for millions across the globe. But have you ever wondered exactly how big real estate is? According to the Global Real Estate Market Report, the global real estate market was valued at USD 3.88 Trillion by the end of 2022. Furthermore, MENA real estate markets are now hot commodities due to rising property values and booming economies. The KSA currently boasts the largest value of under-development real estate projects, at USD 877 Billion worth of projects launching in the next decade. In the UAE, property prices have soared over 20% in the previous year, and in Egypt, gated community real estate sales have exceeded USD 14 Billion in 2023 alone.
Duly riding the worldwide real estate wave is a thriving real estate fintech ecosystem that is transforming how we financially engage with our favorite investment. Leading developers are tapping into the fintech toolbox for benefits such as data-driven financial management and exposure to more investment capital, while offering their prospective buyers new types of financing, alternative payment methods, and integrated payment plans.
In our first entry to the Real Estate X Subsbase series, we’re taking a look at fintech innovations that are transforming real estate finance and payments. The ideas and ventures we’re showcasing here are empowering all stakeholders, such as developers, investors, property managers, financiers, and future homeowners, to make data-driven decisions aimed at maximizing profits, efficiency, and the accessibility of properties. Let’s dive in!
Alternative Payment Methods
While legacy real estate developers still demand a booklet of pre-dated bank checks, hard cash, or bank transfers for installment payments, most progressive developers are turning to alternative payments for a better user experience for their buyers, and speedier access to the cash. Developers around the world are now accepting digital payments, mobile wallet transfers, and even (in a few rare cases) cryptocurrency!
Developers looking for an edge in customer experience can join forces with a local multi-channel payment facilitator that can accept payments through different online/offline methods, as well as overseas payment in different currencies, providing the widest possible array of payment options for buyers, and the easiest collection process for the developer.
Recurring Revenue Management and Automation
Each real estate development can host thousands of units, and larger real estate developers can have tens or even hundreds of developments! Since seller financing is the most common purchase method in MENA, tracking and managing installments can quickly become a developer’s worst nightmare.
Recurring revenue management tools, like Subsbase, can plug in to streamline and optimize this entire cycle. Subsbase provides developers with a user-friendly dashboard that features a live, topline view and analysis of the current financial position, with useful tools to dig deeper and view individual accounts and their status. Real estate developers can customize tailored payment schedules and bundle multiple payments into a single scheduled installment for clients. Automated billing and invoicing cuts down on time lost on cumbersome tasks while eliminating human error on such critical transactions. Finally, recurring revenue management tools offer in-depth analysis and reporting, allowing developers to keep a closer eye on their cash cycle, and empowering them to make data-driven financial decisions.
FYI, the best recurring revenue management tools come integrated with a multitude of payment channels for local and overseas payment collection!
Fractional Real Estate Investment
While real estate is an attractive investment for many, not everyone can afford to buy property today. This is where fractional real estate investment steps in to make real estate accessible to a wider net of potential investors with less capital.
Imagine a property is like a company that you can buy a percentage of shares in instead of purchasing the whole asset. Fractional real estate investment platforms do just that. These digital real estate platforms offer fractions of high-value properties up for sale, and when all shares in “the company” are accounted for, the transaction is executed and each buyer now owns a percentage of the property relative to the amount they have invested.
Different fractional real estate investment models offer more than just ownership. Egypt-based Partment is geared towards buyers looking for fractional ownership of a vacation home, and assigns each “shareholder” a number of days each year to use the property. Dubai-based Stake targets investors looking for a revenue-generating investment. Stake operates as a property manager, rents out the unit, and distributes rent revenue amongst shareholders.
Fractional real estate investment doesn’t have to come through an intermediary platform, and can be offered directly by the developer. In all cases, that’s multiples more owners paying installments for each real estate asset, which means a recurring revenue management platform will be essential!
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We’re only at the tip of the fintech x real estate iceberg. As both industries thrive, we’ll see more financial tools and innovations streamline real estate investment and management. Keep checking our blog for more on this, and we’ll see you in the next entry into the Subsbase X Real Estate blog series!