First REIT to be created in Dubai

First real estate investment trust will be created by Dubai-based company Emirates Reit.

Against the background of the overall property prices decline in Dubai, supposedly having a positive impact on the potential returns from rental income, Dubai-based Emirates Reit plans to start Dubai’s first real estate investment trust.

Depending on when official regulatory approval is granted, the trust will start operating later this year or early in 2016, Sylvain Vieujot, executive deputy chairman of Emirates Reit, said in an interview.

Real estate investment trust (REIT) is a trust that is created to acquire ownership of real estate units using collective investments with the further real estate management carried out by a trust. This is what Emirates Reit plans to bring to Dubai.

“When we looked at residential before, it was expensive,” Mr Vieujot said. “Now the whole market has come down, but at the buildings we are looking at, we don’t think rents will drop significantly.” Today the situation is the most favorable for REITs creation, he said, for while the prices in the Dubai real estate sales sector fell by 11-13% year-on-year, according to different agencies estimates, rental prices stayed almost unchanged.

Emirates Reit plans to raise about Dh2 billion (USD 540 million) of investments over the next two years to buy out some residential buildings in Dubai and within the investment zones in neighboring Abu Dhabi. The company is expecting an annual net yield of around 9 per cent to 10 per cent.

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