Omniyat increased the size of its debut dollar sukuk issuance from $400 million to $500 million due to high demand, signalling strong investor confidence in both the company and the liquidity available within the Islamic finance market.
With orders totalling $1.8 billion, Omniyat was able to adjust the pricing from the higher 8% range to 8.375%, which was considered appropriate when compared to other UAE real estate companies.
Fady Gendy, a fixed-income manager at Arqaam Capital Ltd. in Dubai, stated that the pricing for Omniyat’s sukuk was accurate or slightly tight.
Gendy pointed out that Damac Properties, an established luxury developer with a solid record of financial discipline, sees its debt trade at tighter yields than newer or smaller developers like Omniyat and Sobha.
Given the risks tied to the UAE’s high-end property market, real estate developers in the region must offer higher coupon rates than issuers from other sectors. Fitch Ratings has assigned a ‘BB-‘ rating to Omniyat’s sukuk, indicating a speculative grade with moderate default risk.
Omniyat targets the ultra-luxury segment, focusing on high-net-worth individuals moving to Dubai.
Gendy noted that while this segment may be more resilient to economic cycles, it does pose a concentration risk.
The funds from Omniyat’s sukuk issuance will be used to support its significant pipeline of projects and further its growth objectives.
According to Gendy, the Dubai real estate market is performing well, with strong sales and rising home prices. Issuing now allows Omniyat to capitalise on favourable market conditions before any potential downturn driven by global economic slowdowns or declining oil prices.
The timing also allows Omniyat to take advantage of the market before other real estate companies crowd it with new issuances. Other local firms, such as Sobha Realty and Azizi Developments, are expected to enter the market soon.
