Emirates Reit has Dh500m for acquisitions amid Dubai property slowdown

Emirates Reit has more than Dh500 million in firepower for property acquisitions as the Sharia-compliant real estate investment trust takes advantage of the property market slowdown in Dubai, a company executive said.

“The fact that the market is softening and the number of transactions is significantly lower also means when you are a buyer you are in a better position,” said Sylvain Vieujot, Emirate Reit’s executive deputy chairman. “This might be an opportunity for doing better acquisitions.”

The Nasdaq Dubai-listed company is investing Dh208.3m to develop an education complex at the Akoya by property developer Damac in Dubai. It also last year bought 17 out of 25 office floors, 1,426 car parking spaces and the whole retail component of Index Tower in the Dubai International Financial Centre (DIFC), its biggest acquisition to date.

The number of completed residential property deals in Dubai has tumbled by more than two thirds, according Dubai Land Department figures quoted by broker JLL.

Dubai property prices could fall 10 to 20 per cent over the remainder of this year and early 2016, ratings agency Standard & Poor’s said in June.

“We have less demand, but it is not really having a financial impact on us,” said Mr Vieujot. “We see less demand but we manage to keep our prices.”

Emirates Reit’s loans to value ratio was 27 per cent at the end of June, which gives it room to borrow in the future to fund acquisitions.

“If we buy a building that is fully occupied, or a school or a warehouse that’s exactly what we are looking at, at the moment,” said Mr Vieujot. “We are looking at something with a good cash flow that will help us deliver better returns.”

To date, the annualised return on the Reit this year has been 16.4 per cent, and the company expects to maintain the figure for the rest of the year.

Emirates Reit has 8 properties, with a total value of Dh2.3 billion at the end of June.

Net profit rose 2.8 per cent to Dh129m in the first half of this year compared with the year-earlier period.

The company expects profit to improve this year with the lease of offices in Index Tower, which now represents 43 per cent of the firm’s total asset value.

“We expect over the next quarters to have very good occupancy in Index, and therefore profit can only improve and very significantly improve,” said Mr Vieujot.

The firm expects to lease Index tower at a premium due to its location in DIFC.

In its latest Dubai office report for the first half of this year, Knight Frank said that rent levels for fitted out space in DIFC remained steady at Dh2,530 per square metre, compared to Dh1,991 per square metre in Downtown Dubai and Dh1,615 for offices fronting Sheikh Zayed Road or in Dubai Internet City.


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