Dubai Holding, the vast investment conglomerate owned by the emirate’s ruler, is considering establishing a real estate investment trust (REIT) to capitalise on the city’s property boom, according to sources familiar with the situation.
The firm has approached banks such as Citigroup, HSBC Holdings, and Emirates NBD Capital for the potential REIT offering, the sources disclosed, requesting anonymity due to the confidential nature of the information. Discussions are still in the early stages, and decisions on the size of the vehicle have yet to be finalised.
Dubai Holding is a key investment entity in the city, managing assets worth AED 265B (approximately $58.6B), which include the luxury hotel chain Jumeirah, various theme parks, and the world’s tallest, yet non-operational, Ferris wheel.
Establishing a REIT would provide investors with access to a diverse array of income-generating assets managed by one of Dubai’s largest developers. The REIT would also feature community developments recently transferred to Dubai Holding, according to the sources.
This initiative comes amid a relentless rise in demand for property in Dubai, as thousands of wealthy individuals and professionals relocate to the emirate to benefit from its low-tax environment. Property values have risen for 16 consecutive quarters, and office leasing activity remains strong.
One of Dubai’s main objectives is to deepen its capital market, and launching a REIT would create another avenue for attracting financial flows into the emirate. While efforts to strengthen the domestic stock market have led to numerous initial public offerings, local REITs have faced challenges, including scrutiny over governance issues and pushback from bondholders regarding debt restructuring.
