Real Estate Investment Trusts Gain Popularity

In 2012, NBAD created a property fund in a bid to turn it into a REIT in a future listing. Based on Dubai International Finance Centre (DIFC) rules where both entities are registered, a REIT should be listed and traded on an authorised exchange. Both firms are looking at all options, including local and foreign listings in countries like Malaysia and Singapore.

“The opportunity came 12 months ago when we realised the market was stabilising and undergoing a new transition,” said Zain Abdullah, senior executive officer of NBAD Investment Management, the bank’s DIFC-based unit managing the property fund. “The challenging part of the fund is sourcing the correct assets, and for the last couple of months we have been working with the vendors and other related parties to structure those leases.”

Both firms are building a portfolio mostly composed of commercial and office property and are looking for long-term leases. NBAD is targeting a portfolio of Dhs1 billion for this fund and would like to launch more than one, including Sharia-compliant and sector- specific funds, targeting hospitality and healthcare for example. NBAD and its partner Kuwait-based Gulf Investment Corporation are seeding the fund with Dhs50 million each.

Emirates REIT, with a current property portfolio of Dhs592 million, aims to exceed Dhs1 billion over the next year.

“Our main challenge is to ensure that we select the right assets to acquire at the right price as part of our portfolio, which involves detailed due diligence prior to an acquisition,” said Emirates REIT’s Vieujot. “We are presented with many potential opportunities and must be selective to fulfil the investment objectives of the REIT.”