Fully-owned investment unit is the third subsidiary launched in recent months
Dubai's Union Properties sets up investment company to diversify business
Union Properties, whose board was restructured in May, has set up an investment arm as the Dubai developer continues to diversify its businesses amid the economic slowdown and softening property market.
The fully-owned UPP Capital Investments will specialise in direct and indirect real estate investments and assume the role of an in-house adviser to support the group’s long-term strategy, Union Properties said yesterday, without specifying the capital of the new firm or when and where it will acquire assets.
This is the third subsidiary set up by the developer in recent months, after establishing Union Malls and Al Etihad Hotel Management units.
“We are concurrently taking steps to diversify our revenue streams, access new markets and capture new opportunities,” its chairman Nasser bin Yousef said. He added that while the company remains committed to its core business, it has set up the investment unit to move to the next phase of its long-term strategy of positioning the company for success in both the UAE and overseas markets.
Union Malls manages retail and leisure options within the group and “The Central,” a 100,000 square metre complex in MotorCity, will be the inaugural asset in its portfolio when completed. Al Etihad Hotel Management will manage luxury hotels and furnished residences in Dubai. It aims to provide hospitality services and facilities management for about 3,000 serviced apartments and 3,500 hotel rooms throughout MotorCity.
The UAE real estate sector, which has bounced back from the 2008 financial crisis, has faced some headwinds in the past few quarters. Oversupply of residential units, difficulties in securing new finances and slower economic growth have put pressure on the market, forcing developers to compete for businesses at lower margins.
Many have started developing and strengthening their own recurring revenue lines to ensure steady flow of cash.
Union Properties reported its worst-ever quarterly loss in August after it wrote down the value of investments and booked provisions to cover accounting errors of the firm’s previous management. The company recorded a Dh2.3 billion net loss for the three-month period ending June, which contrasts with a Dh71.7 million profit for the same period in 2016.
Despite tougher market conditions, developers including Union properties are pressing ahead with new projects. The company launched the Dh8bn MotorCity master development plan in September which will be built over four years. Union properties plans to expand operations beyond the UAE borders an is open to mergers and acquisitions, the chairman told The National at the time.