Ladies and gentlemen, please take your seats.
The show's about to begin. Ishtvan, let's put on a show.
Let's do that. Welcome to another episode of
Golden Nuggets with me, your host Sylvia El Darwi.
Today we're going to talk about everything Co ownership and I'm
joined by Istvan. Istvan you has and Istvan
actually is the Hungarian Steven and we learned that Mustafa is
the Arabic Steve. So we are joined by Istvan Yuhas
who is the Co founder and CEO of Shard Shard Shard, which is a
new Co ownership model coming soon, very soon.
In fact, it's probably already here by the time this airs.
Right, exactly. We're here launching now.
Launching now, right? So we're getting, we're getting
the exclusive for you on this model, which is very
interesting, not just for the real estate industry, but for
anyone with money, OK, It's an investment vehicle, right?
So we're going to talk about that, get into the nitty gritty.
You yourself, you're a XBCG consultant.
That's right. You He was Forbes 30 under 30.
Are you still under 30? I'm I'm not under 30 anymore but
recently I still was. He was a Forbes 30 under 30 and
you were the ex CEO of what would be familiar to everyone
here Talibat but the Hungarian version, which was Fedora right?
So tell us about you, your background and and what gave you
the idea of building Shard? What is Shard even?
OK. A lot of.
Questions. Yeah, a lot of questions, right.
Shard is the modern way to own a second home.
You own part of a property and you can enjoy it for part of the
year. The specific model that's spread
around the world has eight Co owners.
That is eight people each own 1/8 of a property and they can
use it for 1/8 of the year. That equates to 44 days, which
you can use yourself in a premium property or you can rent
those days out. And all of this while you are on
the title deed. Which is interesting because
very often with these kind of fractional ownership solutions,
you're actually part of what's called an SPV, which is special
purpose vehicle. So you're technically listed as
a shareholder of a company that owns the property.
In this scenario, you're actually your name is on the
title deed, am I right? You're right, the philosophy and
the core of what we're doing is that you are a true owner,
right? So there is no legal structure
apart from you being on the title deed, which is as close to
being to the property as possible.
So of course like prop tech as as my my viewers will know, is
very dear to my heart. I've got a background in prop
tech and I always ask all my previous prop tech founders and
I'll always ask the future ones. What is the problem you are
solving for? Right.
The problem is a lot of people come to Dubai, they stay in an
Airbnb, they love it, it's beautiful, they know that the
market is hot. It would be a great investment.
The location is perfect to feed out everything.
They think about buying it. Then they wake up the next day
and they're like, should I really buy it when I'm staying
only a couple of weeks a year here?
So this is the problem that we are set out to solve and we
solve it by fractionalising the property.
So you still want to enter the property, You want to spend a
few weeks there a year, you want to become a real owner, but
without having all the hassles and of course the financial
burden of owning the whole thing outright.
And and can you tell us your journey building up to launching
Shard, right, because your background is not necessarily
real estate. Yes, that's correct.
My my background is not real estate.
My background is coming much from from a a business area.
So I used to be a consultant at BCG, classic management
consultant, flying around the world and helping multiple
businesses, from banking, through banking, through
telecommunication companies all the way to energy companies with
some very interesting problems to solve.
Then I started my first startup, which was in education
technology. We were teaching, yeah, at tech.
We were teaching a Harvard based methodology, and that set out
from Hungary, where I'm from, and then we scaled it to 27
countries. Then I exited and I was looking
for something very different and I realized that I love tech.
I was interacting a lot with developers, so I learned to
code. That was my next two years.
I was developing video games as a freelancer then, so you know
how. To code you can help me 'cause
I'm I need to code one thing on my website and I spent maybe
three hours trying to do it yesterday.
Sure, it might also take me some time because that's not what I'm
actively doing now, but it's a strong passion of mine and I
think it helps when you build a tech company that you actually
understand the tech part as well and you can look at code.
'Cause that's The funny thing. It's, it's as a, as founders or
as business leaders, you have to kind of calculate how much of
your, what your time is worth. So I was, when I was trying to
code, I was talking to myself like this is ridiculous.
You are trying to do something that is not your speciality.
Why are you wasting 3 hours on something?
But part of it was like, I'm intrigued.
I want to understand and I want to teach myself.
It's kind of that continuous growth.
And you, I mean you, your background, you did your degree,
you did a master's, like you're still quite deep in learning
about the business, about different parts that have, you
can hire, you can outsource people for.
Right, I have the same feeling. So at the core I'm a geek.
I love going to the nitty gritty details of stuff, which actually
helps in this business. As you will see, there's a lot
of details that need to be taken care of.
So actually the Co owners don't need to take care of those
things, which leads me to the next chapter in my career.
I was the CEO of what is called Talabat here, it's called
Foodora in Europe. I led the Hungarian business and
later on the Slovakian business as well.
And food delivery is also a lot about the nitty gritty details
of making sure that the customer is happy, optimizing all the
operations, having the rider at the right time, at the right
place, so we deliver on time. So I got experience from there
and at one point I had a discussion with a person who
became later on an investor and also chairman in our company who
was very interested in building something in real estate in
Dubai. At the time, I was also a little
bit frustrated with how real estate is done in Europe.
I saw it as something a bit archaic with a lot of
possibility to disrupt which always got me interested as a
startup here. So we started talking about
this, that was a year ago and we realized that there is a model
where it buy it, which is basically which is growing and
it's gaining a foothold around the world and nobody is doing it
here. So that is Co ownership
successfully implemented all across the world from the US
through South America, couple of players in Europe, also
Southeast Asia, Japan, Australia.
So pretty much all the world has this model, but in the Gulf area
there is no one doing it, neither in Dubai nor in the
other Emirates or Saudi Arabia. Because I know I'm familiar with
one company or one brand from a few years ago.
So I know you're not claiming to have, you know, come up with the
idea. It's not an, it's not your
original idea, but you're bringing this idea into the
region and it has been done very successfully by one company I
think in Spain, which is also another High Holiday home type
location. So did you kind of wonder why no
one's done it? Did it kind of ring alarm bells?
And hang on, why has nobody already done it?
Well, that was the question initially pretty much everyone
around me asked. It sounds too good to be true.
If it was so why wouldn't have anyone done it?
And after some thinking and and talking to people here, I
realized that probably the reason is that real estate is so
hot and you can make a significant amount of money
through the traditional selling of real estate that nobody has
gone through the trouble of figuring out how to sell a
fraction of a real estate. OK, so explain to us what
exactly a Shard is. Because Shard the the natural
definition of a Shard is I think a Shard of glass like a you
know, not a, a fragment, a Shard like a piece of of Shard, Shard
of glass. So this is a fraction of the
property. Do I have to know the So it's 8
owners in total? Do I have to know them?
Is it better that I don't know them?
Can I select who I Co own with like?
Tell us a little bit about the detail of how it works.
Right. So Shard is the one eighth
fraction of a property of which you are a true owner.
Your name is on the title deed. This lets you use this property
for 44 days a year. You can either use it yourself
or you can rent out your days through Shard.
When it comes to the other owners, you don't know about
them. So the other seven names, they
also enjoy anonymity. You don't know about them.
But their name appears on the title deeds.
Their name appears on the title deed.
If you want you could know, but of course the whole concept is
more about so whenever you are in the property you are alone.
The other seven Co owners are not there right?
They also have their own days when they can utilize the
property. OK, so this immediately gets me
thinking of the concept of timeshare, which was quite
popular back in, you know, the maybe.
I expected that question. Yeah.
So how is it different from a timeshare?
Right. So actually even Co ownership
started in the US three years ago, the first provider and
that's when I first visited this visited their website, they
started the website saying this is not a timeshare.
I think the association all around the world is pretty
strong. Couple of reasons why it's not a
timeshare and how that model evolved to what we now call
second home managed Co ownership.
One key difference is that this is not only a contract, but your
name is on the title deed. Therefore it's therefore it's a
real ownership. Another concern with timeshare
was that it was really hard to exit your contract, right?
The value of that contract was close to 0.
You couldn't really sell it. That's different here since you
own 12 1/2 percent of a specific unit that has a market value,
it's exactly 1/8 of the market value and the Co ownership
platforms short. In our case, we provide the
secondary market. So say after a few years of
using your property you would like to exit your investment,
you can do so without any limitation.
There is no limitation on when you can do it.
We also let you set your own price and we even help you find
a buyer for it. OK.
So when you own a timeshare in the the classic model, you're
not on the title deed. How does it?
How does ownership work on that? Yes.
So timeshares, not that they are sold nowadays, I think they went
out to the shadows where they belong in my opinion.
But timeshare was essentially a contract.
It's a piece of paper which lets you use a property for X years.
There was no relation to the ownership.
The ownership rights stayed with the timeshare provider.
In our case, we as a company, at the end of the sales process, we
own 0% of the property. We only stayed there as a
manager. OK, So what would be the minimum
ticket entry point? So for how?
What's the cheapest Shard I can acquire?
Yeah, we have beautiful properties on the site.
The cheapest starts at 200,000 deer humps.
So for 200,000 deer humps you get a 1/8 fraction of a premium
property. The specific one is in the Dubai
Creek. OK, SO200K is the minimum
ticket. Everything that you're looking
for at 200 is 1.6 mil and above, right?
So you're sourcing the property and then you look for Co owners
or how does it work? Do you have Co owners on your
database and then you invite them to Co own on a specific
property? Right.
Maybe I should mention that when it comes to the price, the price
differently than how it's typically done for real estate,
partially because we don't consider ourselves a classic
agency, right? So when I say 200,000 dirhams,
that includes everything, that's the total price.
That includes not only the 1/8 price of the property, but it
also includes any brokerage fees, any trustee fees, the DLD
stamp duty fee or markup fit out costs and the first year of
insurance as well. So basically it's the what you
see is what you get. If you pay this amount then you
are covered and you already have 1/8 ownership.
OK, so take me through the journey of what you do.
So do you first find the Shard owners or do you first find the
property? And how do you find and select
the correct investment property? Right.
It's a bit of a chicken and egg problem, at least this is what
we thought originally. Now that we have done this
model, we realize that actually it's more about the supply side.
So people are attracted to great real estate, no matter how we
sell a fraction of it, whether there's a tech element, at the
end of the day, people want to buy great real estate.
They just love touching it. That's part of the investment,
right? It's a tangible asset.
It's not a fund, it's not a stock, it's not something
abstract, it's something you can actually touch.
So it all comes down to the supply and that's the first
step. We have partnerships with some
great agencies, Hospi, Angolan workers, Better Homes and we
source the properties from them. Our goal is not to list every
single property in Dubai. There are already great agencies
doing that. Our goal is to find the top 1%
that's suitable for an investment and that's suitable
for Co ownership and only list those.
OK, so you're brief to the better Homes, the England
Volkers. What do you tell them?
What is your kind of this is what we're looking for.
Yeah, just send us options that this criteria.
Yeah, or this is pretty extensive, I have to say.
So sometimes when I start cooperating with these agencies,
they're like, OK, that's quite the list.
You know, if it's Co ownership, it needs to satisfy a lot of
criteria which normally any property and great premium
property would need to and some more.
For example, because it's Co ownership, we need to, we need
to make sure that it can be rented out and some of the
premium properties in the city are not allowing that.
So those are already out of the picture.
Rented out short term. Short term.
Rental yes, short term rental needs to be allowed.
Another important aspect is that it needs to have a great
amenities because no matter how I fit out a unit, if the pool,
if the gym, if the view is not there, then it won't be a good
sale. It won't it won't fit short term
rentals and also it won't be necessarily a great investment.
So the normal list you would have for a property plus some
more. Plus a few more.
OK. And you're not aiming just for
properties at 1.6 million, you can go higher.
If someone wants a Shard worth 500,000, that's an option.
Or even more so actually where we see, we see demand from two
major sources. One is on the cheaper end.
That's more than that's more of an affordability game, right.
So people would like to enter the real estate letter and for
them 200,000 or maybe 300,000 Deerhams is a way to do that
without mortgage. The other kind of demand we see
is from jet setters, people who travel around the world, They
come to Dubai a few weeks for leisure or business, they live
elsewhere, they live in the UK, they live in India, they live
wherever for them. What's more interesting is the
higher end properties actually. So right now on the site we have
properties on the palm as well, villas on the palm.
I think the most expensive right now is 6,000,000 per 1/8
fraction, right? So if you've got 6,000,000 / 8.
Yes, a lot of money. Yeah.
All right. That's a that's a beautiful.
Property. So for me it sounds great as a
concept for someone who is saving up a deposit for an
investment property but can't quite get there or doesn't want
to take the risk or put all of their eggs in one basket, should
we say? So let's say you've got, let's
say you've only got 200,000. This is a great solution because
I can put it in and get a fraction of the property rather
than a whole property and I don't have to worry about the
mortgage. That's it, it's done.
I own it outright. Or someone who has a million to
invest and doesn't want to put all their eggs in one basket.
That's a fantastic idea. Exactly.
So there are multiple ways how this can be interesting.
One thing you mentioned is people who already have a
deposit's worth, but some of those people for some reason
they don't end up buying. One of those reasons is that
they're looking for off plan and simply they're not making the
cut. So they are not able to buy the
property they would like. So instead of an off plan, you
can get a ready property, a fraction of a ready property.
That's one scenario. Another one, a lot of people for
technical reasons, cannot get a second home mortgage, right,
Right. Maybe they work in real estate.
Maybe they haven't been in Dubai for long enough and they are
not. Yeah, so shout out to those
agents who are making some like killer commissions instead of
going out and buying a watch or AG wagon or whatever.
Have a fraction of. Well, yeah.
Exactly. Buy what you preach, right?
I mean, real estate is hot. We all know that it is hot.
But if you really believe in it, then I think it's actually some
of those assets which you can never have enough of.
And another scenario which you mentioned that's very exciting
is people who want to diversify, right?
They have enough, They have more than enough to buy a full
property. But I've seen this myself.
There is another tower being built in front of yours which
overshadows your terrace and immediately your property value
drops. And that's a scenario which is
hard to avoid. You're in Dubai with the pace of
development being as rapid as it is.
So for those people who want to put their eggs in more baskets,
buying shorts is an option, right?
Instead of buying a a property for one million, you can
actually buy 5 fractions. Or even better, if you have
enough money for one property, you can use that money to buy 8.
So do you have any like big hitters on your platform, as in
like people that are ready to put in one million and you're
waiting for seven other people to put another million each so
that you can go out and purchase an 8 million unit for them?
Yes, exactly. So actually high net worth
individuals often come to us either to invest in the company
itself or that they would like to diversify their portfolio
exactly for this reason. So they already come with, OK, I
have enough for a property, help me figure out a good portfolio
which has one property in downtown, another one in
Business Bay, another one which is a great filler here.
So they want to put together a portfolio and invest as such.
And for that purpose, even if you have a lot of money to buy
multiple properties in Dubai, that's very costly, right?
That's only for the ultra high net worth of individuals at this
point. This is exactly where a Shard
comes in. You make it more accessible.
So if you want to diversify, you still have a realistic budget
for owning multiple properties. So how does it work?
Because obviously if I'm buying a property and it's all mine, I
get to enjoy the rental returns each month.
Now, if I'm buying a Shard and it's for the use of me for one
for 45 days a year and the seven other owners, where is the rent
coming from if it's just occupied by the Shard owners?
Right, let's look at the scenario where all the owners
would like to use this as an investment vehicle, right?
For they all use it as return on investment generating asset in
that case and they indicate that they would like all of their
days to be rented out and then we rent all of those days out
through our partner guest ready on airbnbbooking.com.
You have nice occupancy. The, the, the, the property
generates revenue, We split that revenue evenly across the eight
corners. That is the base and, and
easiest scenario. Now let's say one of these
owners actually decides, oh, this is a great property, I
would like to stay there for Christmas.
All right, then we look at how. Much which is high season which.
Is high season, right? So of course that person cannot
get the same return. Everybody else still gets the
same return as they would otherwise and this specific
person gets a lower return. We look at how much revenue the
property would have generated in that, let's say, Christmas week
and we deduct it from the specific person who used those
days. So irrelevant who decides to
stay and who decides to kind of cash in their their 45 days.
I'm still getting what would be rightfully mine as a rental
return or it's paid monthly, quarterly or how's.
Absolutely, absolutely. You're a true owner.
Be paid out quarterly. OK.
So payouts quarterly equivalent to the rental returns.
And I guess do you have, is that part of your list of
requirements when you're speaking to other agencies or
with your partner agencies to give you supply, you're
expecting a unit that could bring you a certain return?
Right, exactly. So actually when we list the
property, we put together an investment memo, right, a
classic investment memo which calculates how much the rental
revenue is expected to be. We do not use guarantees.
In my opinion, anybody who puts a guarantee needs to get that
certainty from somewhere else and they overpriced.
We don't do that. We estimate based on previous
traction, actual Airbnb data how much the specific property will
generate. We look at properties which are
able to give you net 5% rental yield.
OK, so at the moment a lot of banks are giving you a 5% return
on your savings, so why invest in a Shard rather than keeping
that money in the bank? Because of appreciation, right?
So from the rental yield, you're able to make roughly what the
bank would otherwise give you. That's fair.
Property is a bit more risky than a classic bank account, but
that risk also comes with a potential higher reward that
comes from appreciation. So last year, premium property
in Dubai appreciated by more than 17%.
That's one 7%. Absolutely crazy.
No other world city in the world managed to achieve double
digits. So on the charts, this is just
of the charts number so far, what we have seen in the last 12
months is a very similar number. So the pace of appreciation
hasn't really slowed down. In fact, there are areas which
are able to outperform like Creek that I mentioned over the
last 12 months have seen a 23% increase in the average price.
So if you look at that combined with the rental yield, then you
are by far outperforming what you could earn from a bank
account. So I want to know more about the
nitty gritty. So if there's 8 owners on a
title deed, who the hell is getting the cold call?
Whose number is going to be on the database?
That will end up in every real estate agent's hands.
Yes. So this is where the true
ownership comes with. Also the hassle free part, we
don't put your number in there. We put a number that we create
specifically for this purpose. So we still get the one time
passwords, but you are not bugged by anyone.
Who's answering those calls? Is anyone going to be on that?
That's going to be a busy hotline, right?
That's a phone that only takes texts.
Very good. OK.
And what happens like I'm trying to, I'm just trying to think of
the logistics of owning a property with seven other
people. I don't know.
So what happens if me or one of them wants to exit or needs to
exit? How how does do you have exit
windows or do you have to find a buyer And you like you said, you
help with that. So how does that work?
If I just want I want out. The philosophy behind is that
you are a true owner. As a true owner, you can exit
anytime without any limitation. What it means in practice is
that we do not have exit windows.
You can exit any time of the year when you would like.
How you do that? We have an app.
That's where you schedule your stays, and that's where you also
can indicate if you would like to exit your fraction.
If you do that, we'll let you know what the real price, what
the fair market value of the property is right now.
You can still list it at another price.
If you need money faster, you can list it word price.
That's fine. What happens afterwards is we as
short we have a right of first refusal.
So technically we can buy it at that price if we want from you.
Easy. If you don't do that, then if
you don't do that in the first five days, then the other Co
owners, the other seven people on the title deed, they also get
this offer. They can also buy it at that
price. If they also don't want to do
that, then we can help you find a buyer.
Basically the list, the fraction on our website, which is the
best place for it, right? I mean, anyone who wants to buy
a share of property is coming to shorthomes.com, but you can also
bring your own buyer if you would like.
We allow you that as well. Because I see it like like a
classified. So you've got new shards and
used shards section. My mind's just going into a
second hand Shard. Yeah.
And while we are getting into the nitty gritty, I think that's
an important part of how such a model operates.
If you look at the more mature markets, the US for example,
they have constantly on the website a supply of second hand
shards or second hand fractions, used fractions.
And I think that gives also a lot of confidence to to clients
that this is not a timeshare, right.
There is a real market if you would like to exit your
investment. But then a transfer fee will
need to be paid on every exit right?
Or every new entry. So I pay for that as the Exeter.
There are two scenarios. If you bring a buyer then we
will only take a Commission from the new person, the new buyer
entering the the deal. If we find you a buyer, then we
also take a small cut from you. OK.
And then you need to go to that land department, get a new title
deed, right? We need to change the title date
that is correct. Yes.
And then a transfer fee is paid on that chart effectively.
Which the new buyer needs to pay absolutely.
Or would it be on the whole thing?
How does that work? Yeah, how it works is DLD
charges the 4% stamp duty on the transaction value, right?
So if 1/8 of a property is being transacted, it's only charged on
the 1/8 value. OK.
And you do realize this is gonna mess up all the DLD data because
it's gonna look like properties were sold in like let's say
Dubai Creek, you might have an eighth sold and that's going to
affect the the data for Dubai Creek.
No, because it's going to look like, I don't know how is it
going to be reflected on. Well, we are in we'll.
Soon find out. We are in close cooperation with
the DLD, so we are exactly looking at the specific details
of how to do it. In general, it fully fits into
the vision of Dubai, right? Affordable luxury.
And also I see Dubai real estate as being very eager to implement
new kind of ideas, especially if they worked elsewhere in the
world. So our expectation is that this
new way of ownership will find ground and the authorities are
also very supportive. So all the administrative
aspects are being done in a way that's fully compliant and very
easy, very hassle free for all the users.
And do you think that it's a new generation of investment like
the next Gen. Gen.
Z? You're Gen.
Z, aren't you? Officially, I'm a Gen.
Y. Gen.
Y OK, All right. But there are no alphas as well.
I just found that the latest generation is called alpha
because we ran out of letters. Yeah.
So we're back-to-back to. A back to a right back to square
one. All right, so the Gen.
YZ, the alphas, is this fitting with their new, you know, their
appetite from this, because I don't feel that they have that
same pressure as, you know, my generation did.
Like you haven't made it until you've become a homeowner, a
whole entire homeowner. But now I think people are quite
comfortable investing in crypto and this and that and stocks
and, you know, diversifying their investments, and there's
less pressure to be real estate owners by themselves.
So do you think you have a market there where it's gonna
appeal to the next generations? Absolutely.
It appeals very much to me. That's why I bought my first
chart as well. I think that I'm coming from
personally is that I'm being very asset light.
In the last five years I've worked in five different
countries. Now I will stay in Dubai to
build this company, but in general I move around a lot.
I'm not in favor of having my my wealth in assets.
And the general trend, how it's called is shared ownership or a
shared ownership culture. People nowadays don't
necessarily own a car themselves.
They can use a car sharing service.
People don't necessarily own their primary residence.
Maybe they are using a short term mid term rental solution
for that right So. And even Co working as well.
People don't have their own offices they like.
To exactly exactly. So it fully fits into that.
In fact, if we take a bit of a detour and look at the
historical backgrounds of Co ownership.
This is where it comes from. Let's take a detour.
Let's take a detour, a short one.
But their Co ownership comes from the the do it yours.
Sorry, The do it yourself version is basically people who
wanted to travel around the world, live very freely, almost
like hippies. And they had a property here,
they had a property in the US, they had a property in Europe,
in Asia, right with France. This is how initially it was
started. And at one point it became a bit
more institutionalized, a bit more professional with the full
legal background. And that's why I think that's
why I think that Co ownership as an industry is also now
evolving. We have the first aggregator
that lists every single Co ownership property from all the
continents from similar providers to Shard and you can
view them on one website, right. So this is happening.
And then if you are a jet setter, you can sell your real
estate say in Dubai because you want to spend parts of the year
in Europe, parts of the year in Asia and you can buy a fraction
there. You can have basically a
collection of fractions and travel around freely.
Amazing. So are you planning on world
domination at some point? Absolutely.
So starting to buy, where next? Starting to buy the next?
I think the next should be the other Emirates.
Yeah. Ras Al Khaimah.
Am I saying that's right? Yeah, yeah, yeah.
Ras al Khaimah. Ras al khaimah.
You know what that means? Please tell me.
Head of the tent? Head of the tent is Ras is head
al of order. Hema is a tent.
So head of the tent, I don't know, I guess peak or something,
right? Correct me if I'm wrong in the
comments, but that's what I think it is, yeah.
Right. So Rec could be a potential next
one where the next year we want to go to Abu Dhabi, could be a
resort for people who are a bit tired of the hustle and bustle
of Dubai. And REC is of course interesting
because of the casino development.
And then the big ticket for everyone in real estate I
believe is Saudi Arabia. We are already in talks with
some of the major developers and some of the mega projects in
Saudi Arabia who are looking for an innovative new way to sell
real estate. Since they will have so much
stock on the market, they are looking for alternative
ownership models. And Co ownership is pretty much
the latest kit on the block, the most innovative new way of
ownership. So when I think of Shard, I do
kind of think you're some, you're not brokerage, but there
is a brokerage element because you're selling properties, but
eighths of that property rather than the whole.
And you're not fractional ownership because you're on the
title deed. There's no exit windows, there's
a difference. So can you just kind of explain
how you're not, you know, the similarities that you have with
brokerage and the differences and then the similarities you
have with fractional ownership and the differences.
Because I need, I feel like I need to pigeonhole you.
I don't want to pigeonhole you, but because it's something new
to the region, I need to pigeonhole you somewhere.
Yes. And that's certainly a better
comparison than timeshare. Thank you.
Yeah. So timeshare is out.
We scrapped that. Yes, you're somewhere in between
brokerage, but I need to work out if you're closer to the
brokerage or closer to fractional ownership.
Yeah, that ties back to what I said in the beginning, that I
love to be in the nitty gritty details and you need to be.
We need to master elements of the real estate game, the agency
game, but we also need to master elements of the fractional
ownership game. So, but from one perspective, it
is real. We are a real estate agency,
even though a different one. You have the license to act to
broker. Effectively, yes, we have a
brokerage license. We need to have a brokerage
license. If you come to our site, you
will find the re record the QR code there because we advertise
property, right. So from that perspective, we are
also from the perspective that we are looking for great
property, right. We are, we are scouting the
market, we are analysing properties using data to find
the best property for you. So there are elements of it.
The other part is fractional. Fractional is basically a tech
play. You need to have a great website
where you advertise these options.
You need to have a great app where people can see how the
value of their investment grows. We also have to master that and
we have. OK.
So you've got an app, you've got a website, there's one more I
didn't put in the mix. Maybe you're in between
brokerage and fractional ownership and the property
portals to some degree. Are you like a classifieds at
some, is it a marketplace or not really?
You mean a listing website like by Uter, Property Finder,
Innova? Yes.
So for example, we put quite some effort into researching how
to show properties the best way since many of our buyers, they
are not coming to view the property themselves.
This is an online business, right?
So they make a decision based on pictures and videos.
So we put a lot of effort into optimizing what angles we show,
how we photograph these properties, putting in a 3D
model of the unit. Yes, exactly.
OK. And even though you're breaking
the chunk down so you're buying 1/8, are you getting requests
from people to finance that 8th or yes?
OK. We do get requests for
financing. A lot of people are in it for
the return on investment and well, that's the math part.
But if you're able to invest less and use the bank's money to
play with the bank's money, then technically your return on
investment can even double. So it makes financial sense to
use the bank's money. There are a few ways you can do
that already. One is equity release.
So if you own the primary residence in Dubai, you can use
that. You can collateralize that asset
and get cash, which you can buy, which you can leverage towards
buying a short. Ah, so is that.
That's another option. So if you already have a
property, you're living in it, let's say, and you want to
experiment with something else, you can release some equity, buy
a Shard. Exactly.
And what about someone coming fresh?
Can they get a mortgage or payment plan for their Shard?
Or it's not something you offer at this stage?
Yeah, we are working on a payment plan for buying a Shard.
This is something that is normal in Co ownership.
So every bigger player in the US, in Europe have managed to do
that. We need to have a banking
partner who does it, a classic mortgage.
Just to be very transparent, you cannot take a classic, you
cannot take out a classic mortgage on a Shard because
there would be multiple people on the title deed.
And that's something that the banks don't allow, right?
So we are working on a specific product that lets you finance a
Shard. Equity release is already
available and this other product will come out soon.
And how are decisions made between the owners?
Like again, I'm just, I can't get my head around getting into
some kind of legal agreement with seven other strangers, so
how does that all work? Like, what if one of them dies?
What happens then? So how decisions are made Every
second week we come together in the living room and we create a
forum in togas like in the Greek times.
And that's how we no, just just. Kidding.
Is this like a metaverse thing? Yeah.
How decisions are made? Well, technically for the small
decisions, there is no involvement from the corners.
Say the fridge needs to be replaced, something broke.
We do that ourselves. There is no involvement from the
corners. You charge for property
management. We don't charge a fee.
Interesting management. How bigger decisions are made
and what can be those bigger decisions?
For example, the Co owners feel that the property could benefit.
The value of the property could grow if the TV was replaced by a
bigger unit. OK.
They can put that up for a vote and we facilitate that vote
among the Co owners and then we will execute their will or yes,
there's a majority vote or for bigger topics they can actually
replace chart we the last yeah, they can oust us.
OK. We do that on purpose.
We do that on purpose, so that we are incentivized to do our
best and serve the interests of our.
They can vote you out. They can vote us out, yes, they
can replace us with another property management company if
if they would like and if they are not satisfied with our
service. Because I guess they will just
still continue to remain owners. It does you.
You effectively adjust the management and facilitator of
Shard exits for the duration. So you facilitate the beginning,
then you manage, and then you coordinate exits and entries.
Yes, but you can be replaced, yes.
This is of course not the goal. The model works best if we do
our job well as well. And there is another scenario,
for example if the Co owners decide that they would like to
sell the property as a whole. Yeah, they feel like that's a
great. Move because the market moves in
such a way they can also put that up for a vote.
For that, majority vote is not enough.
Seven out of the eight corners need to vote for actually
selling the property as a whole. But then again we will execute
their will. OK.
So there's some decisions where you need like a high majority
values like selling. OK, that makes sense.
And divorce? What about divorce?
Right. In case of a divorce, there are
three scenarios, right? The two people can decide to
split their investment. That can only happen if they own
at least two eights, because then it can be one.
You can split it only in multiples of 1/8 fractions.
You cannot split a 1/8 any further, so that can be one
scenario. Scenario 2 is that the husband
takes it. Scenario 3 is that the wife
takes the fraction. What if I want to buy multiple
shards so that I can have a majority vote or something?
Like how does are you able to purchase more than one Shard?
Yes and no. If you're able to purchase more
than one Shard, you can purchase up to four eighths of the
property. In that case, you would have
half of it, right? That still doesn't give you a
majority, so you're not able to overrule others if it comes to a
decision. Right.
This is a new concept and it's been done, you know, in Europe.
We're about to see how it's going to work here.
What are the kind of risks that you're expecting or common
issues that you're expecting to face that you haven't yet come
across, right? What are you geared up for?
Right. So one common concern that I
hear is the seasonality of Dubai, right?
So the model is coming from place places where there is also
seasonality and I think everybody found a way to go
around that. Yes, there are a few months in
Dubai which. Probably like this month.
Like right now when we are shooting, it's fairly hot.
And AC is not working. We're quite cool right now.
It's. Yes, if you're sweating, it's
not because we are, it's because of the AC.
In any case, we created a scheduling system which goes
around this problem. So basically we adjusted the
rules that we found in other continents to fit the
seasonality specific to Dubai. Because it is one of those
things where everyone's going to be fighting over the New Year
slot maybe, or the December, October, November, December
slot. To be a bit more concrete, so
for example about the New Year slot, you can book two years in
advance, you can book New Year's, but then you're not able
to book New Year's again, right? You can only book that once.
Or another thing is we limit how many stays and how long those
stays can be. At one point, we only allow you
to have three maximum 10 days each advanced stays.
So you cannot put all your 44 days in there and book entire
December and January. OK.
The whole point is that the stays must be equitable for the
corners. OK, So naturally as a tech
founder, one exit under your belt, what's the plan for this
second exit? Because you're, you're not
planning on doing this for 1015 years.
So what what's the what's this exit strategy in the next five
years? Are you planning to exit in five
years? Yes, we are.
We, we have just started and of course the goal now is to build
this up. But yes, in the time plan, we
have an exit scenario. We have multiple potential
buyers for this. So how it can go?
I think the region as a whole is very strong.
It will keep developing. Will Dubai be in five to seven
years our main market? I'm not so sure.
I think Dubai will be a crucial market in the beginning.
And it's very good to learn how to do this, how to properly
scale the model in the Middle East.
But then Saudi Arabia has just so huge potential that
eventually I believe our focus will shift over there.
When it comes to Saudi Arabia, they will have a need for
selling out a lot of units from their Giga projects, right?
So they can be a potential acquirer.
Another potential way can be is that a family office or a real
estate agency is looking for a cash cow.
And since this is an innovative model with a great revenue
generating capability, it can work out from a business
perspective Why it's great is as long as there are no other
entrants in this market, we can set the price right so we can
generate nice revenue. And actually it's not easy to
enter this market. And what we have seen everywhere
else is that there is one dominating player even after 3-4
years in the US now, since if somebody wants to buy a
fraction, they will go to the biggest player, that's where
they have the highest chance of actually buying a unit like
this. But you have the, I suppose
just, I mean saying that you probably have competition risk
coming from the fractional ownership companies and also the
brokerages. What's to stop them from
reproducing your model? Yeah, I think in both cases the
answer is the same. They already have a great
business and this is relatively complicated to put together.
It requires, it requires a lot of focus on finding the perfect
governance model, optimizing all the legal setups for this, so
developing the tech etcetera, etcetera.
So I think a lot of these companies would not go this
difficult way down this difficult road and they're.
Struggling as as it is to find one lead for one property, let
alone 8 buyers for one property. Even though the sales time for
1/8 should be faster than for a full property, right?
So we look at short as a sales accelerator.
In an ideal case, we are able to sell out a property in roughly
the same time or even faster than somebody would sell out the
whole property. OK.
And in terms of fundraising and you know you've just gone
through the journey, have have you, how much have you raised?
What are are you currently raising?
What? What's?
Your we have already raised our pre seed funding.
So that got us through all the way, the product development
website application, the legal set up, hiring the right team,
putting together a marketing plan, putting together the sales
strategies. Now we will start raising our
second round, which will enable us to scale up in Dubai and then
we will need further rounds to expand to the other Emirates.
OK, we've got some VCs and Angel investors watching, so how much
are you looking for for a Shard of Shard?
Right in the next round we are raising $1,000,000.
OK, alright. Any investors out there you the
details will be down below. OK, but my audience is not just
angels and investors. My audience is real estate
industry professionals. So from CEOs to agents to
property managers to everyone in between, how can they work with
you? So you know, they might have
been watching this episode and thinking, ah, I can, I've got a
listing. I can sell it through Shard.
How? How else can they work with you
and how does it work? Right, So what's?
In it for them. That's what they wanna know.
I love it. I know my people.
What's in it for them? Look, I think that all of these
people come across leads who would be interested in buying a
sharp. So let me explain a little bit
what has gone successfully so far.
Talking to the real estate agents now, they probably have
leads who would like to invest a considerable amount in Dubai,
but they are worried about market risks.
So one way to hedge risks is actually what you said, put your
eggs in multiple baskets. You don't have to choose one,
right? You can choose all of them and
invest in all of them. You can buy a fraction in
multiple properties, so. That's one way of doing it.
So I, you know, I know guilty of this.
I used to take inquiries and they had a ship budget and I'm
like time waster their budget. Why are they calling me
ridiculous budgets? So now there's no need to trash
those leads. You can actually convert them
into a Shard owner. So there is now something that
you can do with those people that have a smaller budget.
OK, continue. Every dream counts.
Yeah, exactly. Every dream counts.
So This is why we are now launching a cop referral Cop
where you can refer clients to us who don't have sufficient
amount, maybe because they simply have budgetary
constraints, maybe because they cannot get a mortgage for some
reason. So all of those leads are very
valuable for us. They are paying an above market
Commission of 3% on the net short price.
That's if these dead leads, let's call it a deadly pool of
the not a Not a cut. Sounds so negative the pool.
Of dead leads. Dormant leads?
How about? That the dormant leads.
OK, that's right. OK, so I get thrown into a pool
of dormant leads and I get 3% Commission if one of them buys a
Shard. Exactly.
All you need to do is refer the client to us.
We have a handy website for this.
You simply make the referral and then we take care of everything
else. We explain the model to the
customer, we show them the real estate if they would like, we
structure the whole deal and and make the sales.
OK, do I throw these dead leads to you or how do I need to have
the conversation with the dead lead and just explain I'm gonna
throw them in the dead lead pool?
Well, you should tell them what they are signing up for, right?
So you should explain that this is about Co ownership.
But typically we get leads who have heard a few sentences about
this. They are very eager to learn
more and we are happy to do that part and also because this is a
competition, we will run it from mid August till end of
September, OK And we will then hand out cash prizes of up to
50,000 dirhams to the top referrals.
Is this an exclusive competition for Golden Nugget viewers?
There we go. Well, every drink.
Out some money now. OK, All right, so make some
money out of the show, not just learn and educate yourself and
entertain yourself. OK so is there a link or
something I can add down below? Yes, OK.
Exactly shardhomes.com/refer. That's where you should go to.
Shard homes slash refer We're going to put the link down below
you. OK, so just, I know I called it
deadly, but what you do is if you've got someone who doesn't
have a sufficient budget and instead of just saying sorry, I
can't help you, you say, look, I've got another alternative for
you to strongly consider. It's a very popular investment
vehicle. Rather than you buying a
property on your own, you can purchase it with seven other
dead leads. OK, No, no, we'll get a treat.
No seven other Co owners and all the hard work is taken out of it
basically. OK, exactly.
So you can have the conversation, can there be like
a little intro? There'll be an intro or a brief
sure on how they can explain or something.
We'll put that together. Okay, can anyone enter this?
Cup, right, so you have the agents who for whom it is very
interesting because they could make more Commission than from
selling out a property, right. Instead of the classic
Commission, you get 3%. But it is also very interesting
to people who come across people investing in Dubai.
It might be conveyancers, people in property management, in
property management. Can I just like, I have a
background in property management as well and a shout
out to you guys, You are working so hard, dealing with all the
complaints, all the headaches and you're seeing everybody
around you making so much money out of Commission and you feel
like you're working harder than them.
I know, I know what it's like. But this is an opportunity
that's available to them because you're dealing with the property
managers are dealing with tenants who are trying to get on
the property ladder or you know, most likely will be moving out
to get on the property ladder. So what's in it for them?
The property managers? The conveyancers?
The administration? The receptionist?
Exactly. Well, This is why we call it
every theme counts because a lot of people come across these
opportunities and up until now they did not have the, did not
have a way to actually leverage these, these contacts.
Now they do. So again, with a very simple
referral, you can make money out of these contacts and also you
don't need to be a real estate agent.
You can make a simple referral without having any kind of
license. So Ishtman, for anyone that's
stuck around till the end of this episode, what is your go to
market message for the industry? Co ownership is for everyone,
whether you are an aspiring second home owner or a
conveyancer who sees how much money is being made in real
estate, Co ownership and share this for you.
OK, that's it. That's a lovely message.
Thank you. Making it more accessible,
sharing culture, tech, property, real estate investments.
Yeah, all of the all of the above.
All right. Thank you so much for joining me
as far that was really insightful.
I learnt something. I hope you all learnt something
as well. If you have any questions that
you wish I'd have asked, please leave them in the comments.
The team from Shard will be more than happy to respond to them.
Thank you very much. See you next time.
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