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CBRE says dozens of pension and sovereign-wealth funds have approached the company hoping to invest in Dubai shops and offices. Christopher Pike / The National
CBRE says dozens of pension and sovereign-wealth funds have approached the company hoping to invest in Dubai shops and offices. Christopher Pike / The National

Dh2bn in funds seeks new home in Dubai offices

Global financial institutions are looking to invest Dh2 billion in Dubai's most high-profile commercial buildings.

Global financial institutions are looking to invest more than Dh2 billion (US$544.4 million) in Dubai's most high-profile commercial buildings.

According to CBRE, the world's largest commercial property agent, dozens of pension and sovereign-wealth funds have approached the company hoping to invest in Dubai shops and offices.

The agent, which over the years has advised major investors including Norway's sovereign wealth fund and the Californian Public Employees Retirement System, said institutions that had previously disregarded Dubai were now interested in its commercial property.

"This year we have looked at deals on behalf of overseas institutions worth a total of Dh2.6bn and if we could find the right stock, that's the sort of weight of money looking to come to the Dubai market," said Nicholas Maclean, CBRE's managing director for the Middle East. "Once one deal is completed and you start to see European pension funds buying something over here, then a lot more are likely to come."

CBRE said overseas investors were looking for income-producing, investment-grade assets in the city. But because there were so few such properties on the market, some were instead contemplating taking on new development.

During the past year, the Dubai office investment market has completed only four major deals, CBRE reported. Only one of these was widely publicised - the purchase of the Gate Precinct Building 6 in the Dubai International Financial Centre by Legatum Group.

"We're going to see a change in the mindset of some commercial institutional investors going forward and it's going to lead to an increase in their allocation for development financing," said Mr Maclean.

"Therefore a scheme that is launched by established developers potentially could start to attract institutional investors - which it has never done before. If there's an opportunity to be a co-investor or co-developer with the government, then I think the access to institutional money will change in due course."

The agent suggested recent announcements about mega projects such as Mohammed bin Rashid City and the five theme parks to be developed in Jebel Ali could benefit from such funding.

In a report published on Sunday on office space, CBRE said that vacancy rates in Dubai stood at 47 per cent with the highest vacancy rates reached in Business Bay and Silicon Oasis.

This figure was expected to rise to 50 per cent.

Despite the glut of space, CBRE said occupancy rates for good quality, single-owned office properties were "very tight."

lbarnard@thenational.ae

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