Investing in commercial assets in the UAE usually requires individuals to invest a huge amount of money to make significant gains. However, Investo, one of Dubai’s leading investment companies, brings a unique and lucrative leasehold investment option, allowing individuals to invest in commercial real estate, starting at Dh250,000.
This valuable proposition for investors works for those looking to diversify the investment portfolio and make secured and sustainable returns. It offers people a guaranteed 12 per cent per annum return on the investment.
Mohammed Shihab AB, CEO, Investo, explains how the leasehold model enables individuals to make better gains.
What is leasehold investment?
We lease the land from Emirati landlords and government authorities for about 20-50 years and build a commercial shopping complex to rent it out. In the leasehold model, we are not investing much in the land; our significant funds are invested in the construction and development of the shopping malls. Hence, we generate high returns on the investments compared to freehold property.
How is leasehold investment different from freehold investment?
Our investment in the leasehold model is 10 per cent on the land and 40 per cent on building the project. This is 50 per cent less compared to freehold investments, where one requires 60 per cent investment on land and 40 per cent on building the project. Since the project’s investment is lesser than freehold projects, our rate of return is very high. If we buy a freehold property, we can earn 4-6 per cent from the rental income. After four or five years, if we sell the asset, we may get more price for the property property, less or the same value. However in leasehold, we can get 20-25 per cent returns on investment in five years. We obtain our money, spent on construction in four years and in the remaining leasing years, we enjoy the profits for the rentals.
We get our entire capital back faster, as the rate of return is very high compared to freehold property investment. After the lease expiry [in about 20-50 years], we don’t have any rights in the building. The project then goes back to the landlord.
Which are your projects currently available in the market for investors to invest in?
Currently, we have built six community shopping complexes in Dubai, all located in the labour areas. Two shopping malls are in Jebel Ali, and four are located in Muhaisnah. These are community malls with one anchor store – generally, a supermarket or departmental store, money exchanges, and other retail outlets targeted to cater to people’s daily lifestyle needs.
Who can invest in your projects?
Individuals who want to invest in commercial real estate and enjoy high returns must invest in our projects. Investments start with as little as Dh250,000 to Dh1 million, where individuals become part owners in the building - based on the amount they invest. We will provide you with a company agreement, that has the property details, such as the location of the plot and the area where the building is constructed. Investors are also provided with an attested Dubai court agreement that mentions the invested principle capital. You will have the option to select from our six community shopping malls projects that are currently up-and-running and begin to earn dividends in six months.
What is the return on investment that the investor will earn?
We earn from the rental income in our projects and provide you (our investors] with a 12 per cent return every year, paid as quarterly dividend returns. You can start earning dividend starting from the six months from the time you invested -- guaranteed 3 per cent returns paid quarterly. You are allowed to withdraw the funds you have invested after giving us a one-year notice.
How can the investor invest in your projects?
You can visit our website investouae.com and submit your interest, providing us with your details and request a call back via the website. Our investment advisor from the office will call and provide you with all the details and even take you to our six existing buildings to help you choose your investment.
When did Investo start?
Our holding company is 43 years old that started in 1978, trading in the UAE in Al Ras. In 2011, we moved into properties and generally funded our own projects. Currently our projects investors have been family and close associates. Our assets are valued at Dh560 million in the UAE. Our first project was in Muhaisana, a 42,000 square feet shopping complex with outlets, such as Aster Clinic, Al Ghurair Exchange and UAE Exchange. This project was a unique one that got us a 90 per cent return on investment in the first year of its operations in 2013. We observed a massive potential in developing community malls in the labour areas. So, we started to pick up lands in the commercial locations in several labour areas and began developing projects in them, one by one.
What are your future projects?
In 2020, we picked three lands in DIP, Jebel Ali and Muhaisnah each, since the market was low and we had the upper hand to negotiate with the landlord. These are also in the labour areas where we will be developing new projects in the future.