200m shares change hands
Other REITs have struggled
Dubai Residential REIT surged on its bourse debut on Wednesday as investors who missed out on its $584 million initial public offering (IPO) bought the stock.
The success is being seen as an indication of enduring confidence in the emirate’s buoyant property sector.
A real estate investment trust (REIT) owns or finances income-generating property, enabling investors to indirectly own property without having to buy real estate outright.
Publicly traded REITs are popular in the United States and Japan, for example, but two earlier listings in Dubai – Emirates REIT and ENBD REIT – have struggled for profitability and trade far below their IPO prices.
Such woes seem of little concern to investors in Dubai Residential REIT, which was up 15.5 percent at AED1.27 as of 12.20pm UAE time. Trading was brisk, with around 200 million shares changing hands.
Government-owned Dubai Holding sold 15 percent of Dubai Residential REIT at AED1.10 per unit, or share, in an IPO that was 26 times oversubscribed. Originally, Dubai Holding planned to sell a 12.5 percent stake, but such was the demand that it expanded the offering.
The IPO raised AED2.15 billion ($584 million), valuing Dubai Residential REIT at $3.9 billion and implying a yield of 7.7 percent. Total gross demand for the IPO was $15.3 billion.
Ahead of the IPO, Dubai Residential REIT pledged to pay at least AED1.1 billion in dividends in both September 2025 and April 2026.
Dubai Residential’s portfolio comprises 35,700 residential units and 1,731 retail units that combined have a gross asset value of AED21.6 billion ($5.9 billion), according to its IPO prospectus.
Dubai duo Emaar Properties and its subsidiary Emaar Development, which are both ultimately government-controlled, both reported stellar first-quarter earnings. The pair’s quarterly profits rose 27 and 48 percent respectively year on year as property sales increased.
ValuStrat’s Dubai Price Index reached a record high of 214 points in April, up 1.6 percent versus March and 25 percent higher year on year. The index has surged from 100 in January 2021, indicating prices have more than doubled since then.
Emirates REIT and ENBD REIT, which are listed on the illiquid Nasdaq Dubai bourse, were trading at $0.49 and $0.56 respectively on Wednesday, both down 50 percent or more on their IPO prices.
The two REITS are far smaller than Dubai Residential REIT, raising $280 million combined in their flotations.
