Dh100m real estate fund launched

The UAE's first real estate investment fund, launched yesterday, plans to invest in the UAE and selective Middle East markets by cashing in on the strong property market in the UAE.

The Dh100 million fund launched by National Investor and Colliers International, will target mainly at high networth individuals and companies in the GCC. The fund could be listed next year on the Abu Dhabi Securities Market.

It is the first Central Bank approved UAE real estate investment fund. "The fund brings unparalleled diversification across geography, property type and investment type, providing a unique investment vehicle for regional investors looking for exposure to the strong and stable UAE economy and booming local real estate market without the risks and obligations of individual property ownership," said Dr. Karim El Solh, chief executive, the National Investor.

He said property is increasingly being re-evaluated as a new asset class among institutional investors who seek preservation of capital and income streams as well as value enhancement.

On an international level, real estate funds have been among the best performing funds this year especially when equity markets are in negative territory.

The fund is being launched at a time when the UAE property is witnessing an unprecedented level of investment with the sector accounting for some 18 per cent of the GDP. Dubai alone saw over Dh3.25 billion of real estate sales, apart from the impact of the expatriate free zones.

"The UAE property market has been particularly resilient with many industry players upbeat on future prospects for the real estate sector."

Also, the market fundamentals and timing are ideal to launch the fund, he said. "At a time when US Fed cut rates in November to 1.25 per cent, the lowest since 1961, real estate yields in general and in the UAE in particular look attractive."

While the initial size of the fund is Dh100 million, it could go up to Dh200 million based on market demand and will be divided into units with a value of Dh100 per unit. The minimum investment is Dh500,000 and thereafter in multiples of Dh100,000. It will be a close-ended fund with a life of seven years and option to extend another three years.

Andrew Charlesworth, executive director, Colliers Internatio-nal advisor to the fund) said in 2002 there has been a hardening of rents, which are forecast to remain stable in the medium term with possibility of growth in the longer term.

The UAE real estate yields have hardened to a range of some 7-12 per cent, much higher than most international markets (4-7 per cent), he said.

The Abu Dhabi-based National Investor is a leading investment & asset management firm with over $25 billion worth transactions to its credit while Colliers International with over 200 offices in 52 countries has over $25 billion in property under management.