Dubai Real Estate Fund Aims To Double In Size, Launch IPO Within 3 Years

At a time when Knight Frank's latest Global Residential Cities Index showed property prices in Dubai have fallen by more than nine percent over the past year, one Dubai-based real estate fund has reported a total annualised return of 12.5 percent for 2018 and is aiming to double in size and list on the stock market within the next few years.

Founded in 2018, the Manrre Real Estate Fund, managed by Dalma Capital, last month published results for its first year in operation. The fund, which currently manages a AED265 million ($72.3m) portfolio, reported a total annualised return of 12.5 percent, compared to an average decline of 27 percent among its benchmarked peers within the real estate fund market.

Meher Anand, a director at the fund, said a number of factors had led to its success last year. “We only acquire assets that yield between 11-12 percent return. It is a very selective process of acquiring assets and we focused on logistics and industrial real estate,” she said.

E-commerce boom

The main catalyst behind the high returns in the logistics and industrial real estate sector is the booming e-commerce sector, with players such as Amazon and Noon.com pushing growth in online shopping.

The value of the e-commerce sector in the UAE is expected to reach $27.2 billion by 2020, double what it was in 2016, according to a recent study by the World Economic Forum. At the same time, e-commerce spending in the Emirates increased by 48 percent year-on-year last year, according to Mashreq Bank’s latest reports.

“The logistics and industrial real estate sectors are benefiting from the regional e-commerce boom underpinned by the launch of Noon and Amazon.ae. As we have seen in other markets, when retail spending behaviour shifts to online shopping, real estate demand shifts from retail centres to warehouses,” Zachary Cefaratti, CEO of Dalma Capital, said in a press statement.

The growth in digital apps has also been a boom for the fund, with one of its key tenants being the food delivery app Deliveroo.

Ambitious plans

At present the fund is managed by Dalma Capital and sponsored by the Dubai-based Lahori family, but Anand said it has ambitious plans for the future. “The next stage is to look for third party investors… Our aim in the next three years is to be a AED500m fund and the plan is to list,” she said.

Anand said the fund plans to remain within the logistics and industrial sectors and this strategy was endorsed by the recent Q3 Real Estate Market report by consultancy firm ValuStrat, which found that while residential off-plan sales declined 14 percent and housing rents fell 7.9 percent year-on-year, industrial sales prices remained stable and industrial rents only saw marginal declines.