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Southern African fund picks exposure in Dubai realty

Turnstar Holdings starts off by picking up mid-market properties in key locations

Gulf News

Dubai: Botswana-based, publicly-listed Turnstar Holdings Ltd has picked up an office building in Dubai, which could set the stage for further acquisitions in the city’s mid-tier freehold clusters. Investments are said to be in the region of $100 million (DH367 million).

Turnstar’s track record until now had been largely confined to the African market, through owning and operating malls and business parks. Its first acquisition in Dubai is an office building in Dubailand’s Majan cluster, a ground plus four-storey structure offering 40,000 square feet for boutique offices.

The institutional property and fund operator also appointed Dubai-based Global Capital Partners — which has a land bank of 1 million square feet — to be its regional representative as it seeks to build a portfolio of properties offering high-yield generation possibilities.

Subsequent purchases are under consideration. These will include a mix of residential, commercial and industrial as well as retail offerings, predominantly in mid-income areas as Dubai gears up for the World Expo 2020.

Turnstar is also setting up an office here, while Global Capital Partners will manage current and future asset acquisitions.

On why it is handpicking mid-market properties and locations, Uzair Razi, Turnstar’s spokesperson, said: “As our balance sheet shows, we are long-term investors. We believe that this is the only way to maximise the return in real estate assets.

“It is our intent to capitalise on this [the Dubai exposure] over the next decade. We believe Dubai will continue to provide extraordinary returns over the next few years. We are patient investors as well, and are more than willing to ride out the vagaries of business cycles to reap the long-term rewards.

“Our analysis reveal that the corridor leading up to the World Expo 2020 site and the new [Al Maktoum International] airport offered the highest potential for capital gains, especially given the emphasis this city gives to logistics. And logistics is a strong precursor for capital gains.”

As per the Turnstar website, it currently has real estate assets of more than 2.4 billion pula (Dh846 million). Moving into dollar-pegged markets such as the UAE will also offer a currency hedge against domestic currency volatility.

The planned investments will increase their balance sheet by more than 50 per cent. The company’s share price more than doubled over the last three years.

“While our preference is for higher rental yields — which data shows to be the greatest weightage for appreciation in the long term — we are not only looking at the mid-income market,” the Turnstar spokesperson added. “If yields and opportunities present themselves at the higher end of the market, then that will be the route that we will take.”

Turnstar’s entry could be one of the first instances of listed southern African institutional investors forming plans for a Dubai property exposure. Traditionally, northern Africa has channelled ample funds into the sector, both retail and institutional. The belief in local real estate industry circles is that Dubai’s property market can start leveraging foreign institutional interest in earnest going forward. The Dubai Land Department is also giving this a big push, with upcoming regulatory reforms that would encourage overseas REITs (real estate investment trusts) to come in.

When that happens, it can be a game changer from Dubai property’s heavy reliance on retail investors. On the alliance with Turnstar Holdings, Sameer Lakhani, Managing Director of Global Capital Partners, said: “There is no set commitment for any number of projects; rather, the decision is fuelled by the opportunity that is presented in the marketplace. There is a joint conviction that as the real estate market here matures, opportunities will continue to present themselves. Accordingly, the mandate is large ... but essentially opportunistic.”

For information on the real estate sector within the UAE, please visit our sister site, getthat.com.

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