A Cayman Islands-based wealth management firm has launched a $50 million shariah-compliant distressed property fund in the UAE to tap into the country’s suffering real estate sector.
Mayfair Wealth Management expects the fund to deliver an annual return of 12-15 percent by way of leasing and rental income, the firm said in a statement on Tuesday.
“We have identified a significant opportunity that stems from the slowdown in the UAE property market, one that will breath new life to undervalued but potential-laden projects in the country,” said Amani Choudhry, the firm’s chief executive.
Real estate prices in Dubai have slumped since the global financial crisis brought to an end a regional economic boom late last year.
The downturn has prompted Dubai developers to cancel scores of expansion projects and led to thousands of job cuts in Dubai, raising the risk of home loan defaults as the global financial crisis hit the Gulf Arab trade hub’s once-booming property sector.
The fund would look to acquire undervalued properties and is open for subscription until Aug 31 with a maximum tenure of 36 months at $1 per share, the firm said, without saying when it expected to close its first transaction.
Dubai’s second-largest property developer Deyaar is aiming to close a $136 million distressed debt, including its own, by year-end to help boost returns for shareholders.
House prices in the emirate have fallen 50 percent since their peak in the third quarter, Colliers International said on Monday.
Mayfair said the fund would be arranged as a musharaka structure. In a musharaka, the bank provides funding to entrepreneurs, who also contribute capital. Profits from the venture are shared. (Reuters)
Follow us on
