Dubai investment bank Rasmala has bought 72 warehouses in Dubai as part of a wider push to acquire Dh1 billion of property in the UAE and Egypt over the coming year.
London-listed Rasmala, which has recently refocused on alternative assets and property in the Middle East, said yesterday that it had bought the 600,000 square feet of warehouses in Dubai Investments Park for Dh300 million, reflecting a yield of more than 10 per cent.
Rasmala did not disclose the seller.
Rasmala said that the warehouses were leased to 31 different tenants involved in a range of sectors including manufacturing, retail and food and beverage.
All of the warehouses had been acquired through a sale and leaseback agreement and would be leased back for the next seven years, the company said.
Ajman Bank provided Sharia financing and strategic seed investment.
“This warehouse acquisition demonstrates our commitment to the UAE market and builds on our close partnership with Ajman Bank,” said Rasmala’s chief executive, Zak Hydari. “We plan to invest an additional Dh1 billion in real estate transactions over the next 12 months.”
Last year, Rasmala, which means “capitalisation” in Arabic, launched a real estate fund aimed at buying up Gulf assets and which it eventually plans to float on the stock market as the region’s second real estate investment trust (Reit) after Emirates Reit, which floated in 2014.
At the time the company said it hoped to more than double its assets over the next three years to US$3 billion.
“Large warehouse purchases like this do not happen very often in Dubai because it is very hard for institutional investors to find good quality industrial buildings and good quality tenants,” said Andrew Marshall, a senior surveyor in Knight Frank’s Dubai office. “Nonetheless, we are seeing that industrial property is becoming more and more popular with investors because it offers such a high yield.”
According to Knight Frank, yields on warehouses in Dubai Investments Park stand at between 10 and 12 per cent while some buildings such as labour accommodation can fetch a yield as high as 15 per cent.
Reits are common in other parts of the world, where they are often sold to investors as a way of putting money into the property market without the difficulties of direct investment. Reits buy properties such as large office buildings and shopping centres, manage them and distribute the rental yield to investors.
Despite a strong appetite from investors to put cash into Dubai’s property market, historically the Reit sector in Dubai, and indeed institutional property investment in the UAE, has struggled to take off. It has been held back by a shortage of investment-grade office space and an unwillingness to sell assets from large private landlords.
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