#Dubai Ruler’s $584 Million REIT IPO Surges In Debut - Bloomberg

Dubai Ruler’s $584 Million REIT IPO Surges In Debut - Bloomberg

Dubai Holding’s $584 million residential real estate investment trust surged in its trading debut, as the city’s property market boom continues to lure investors.

Dubai Residential REIT closed nearly 14% higher at 1.25 dirhams per unit on Wednesday, after rising as much as 19% from the offer price of 1.10 dirhams.

The investment firm controlled by the emirate’s ruler had demand for all units within minutes of opening books and later increased the size of the offer from $487 million. The IPO was marketed as a rare opportunity to gain exposure to Dubai’s fast-growing residential real estate sector.

Dubai’s property market – both residential and commercial – has been buoyed by an influx of new residents since the pandemic, amid looser visa regulations and low taxes. Property prices have risen as much as 70% over the past four years.

The overall demand was “very healthy,” said Pradyut Pratap, co-head of investment banking for the Middle East and North Africa region at Morgan Stanley, one of the deal’s global coordinators. “A number of high-quality international names joined the book — including blue-chip hedge funds, long-only funds and real estate specialists.”

Dubai Holding is also planning to list a separate property portfolio which includes malls and other commercial assets to capitalize on this momentum.

A host of firms in the United Arab Emirates are seeking to take advantage of the supportive market, with two contractors lining up listings and two online property portals courting equity investors.

Dubai Residential REIT’s listing is the city’s first IPO of the year, and furthers the government’s privatization drive, which has seen it take public a utility, a parking operator and a taxi company.

Analysts said the deal could also help REITs gain traction in the UAE, where the asset class has had a checkered history. But Dubai’s real estate rally is increasingly pricing out buyers, sparking a renewed interest in REITs. Some investors are opting for fractional ownership apps, with entry points as low as $136.

In addition to Morgan Stanley, Emirates NBD Capital and Citigroup Inc. acted as joint global coordinators on the deal. Abu Dhabi Commercial Bank, Arqaam Capital and First Abu Dhabi Bank acted as joint bookrunners.