Dubai developer Binghatti set to launch benchmark sukuk offering

The company is looking to diversify funding sources as it expands its ultra-luxury projects portfolio

Mercedes-Benz Places in Downtown Dubai, the latest Binghatti-branded properties project. Photo: Binghatti Properties
Powered by automated translation

Binghatti Holding, a Dubai-based property developer, is looking to raise $500 million from the sale of Sharia-compliant bonds as it aims to diversify its funding base.

The company is preparing for the “significant financial milestone” in the coming days, subject to market conditions, it said in a statement on Tuesday.

The debut US dollar-denominated three-year sukuk offering by Binghatti will be a benchmark size transaction, which usually refers to a bond sale worth at least $500 million.

“This initiative further solidifies the company's commitment to exploring innovative avenues for capital raising while adhering to the principles of Sharia-compliant finance,” the company said.

Corporate and financial sector issuers, as well as government-related entities in the UAE are increasingly looking to tap the debt capital market to expand their funding base.

Property developers, in particular, have turned to bond markets in recent quarters to finance the expansion of their portfolio of assets amid continued growth momentum in the Emirates.

In October, Damac Properties, another Dubai-based developer, raised $300 million from a sukuk sale.

In May, Aldar Investment Properties, the real estate management unit of the emirate’s largest listed developer, Aldar Properties, raised $500 million through its debut green sukuk to acquire more assets and meet its sustainability goals.

The property market in UAE has maintained a robust growth momentum after bouncing back from the pandemic-driven slowdown.

Last year set new records for value and volume of sales in Dubai, the commercial and tourism hub of the Middle East. In September, average prices surpassed the previous peak set 10 years earlier.

The ValuStrat Price Index, which analyses changes in property values, shows 19.9 per cent growth in 2023.

Property values in Dubai are expected to appreciate between 8 per cent and 12 per cent this year, according to Cushman & Wakefield Core.

Dubai's luxury home market, the core segment of Binghatti, reached record levels in 2023, with sales of $10 million-plus homes nearly doubling to $7.6 billion and outstripping global rivals London and New York, according to property consultancy Knight Frank.

Half of the properties in Binghatti’s branded residences project in Downtown Dubai – Mercedes-Benz Places – were sold a day after it was launched in January, signalling robust buyer demand for ultra-luxury properties.

Binghatti said Emirates NBD, Dubai Islamic Bank, Abu Dhabi Islamic Bank, HSBC, Mashreq, Sharjah Islamic Bank and RAKBank have been appointed as joint lead managers and bookrunners on the planned deal.

The company has already concluded a non-deal roadshow, engaging with fixed-income investors in Hong Kong and London.

Binghatti, which is rated B+ with a positive outlook by Fitch Ratings, has a luxury branded properties portfolio of nearly Dh16 billion ($4.4 billion), while its projects catering for other market segments are worth about Dh7.6 billion.

“With the contemplated debut US dollar sukuk, Binghatti enters a new phase of growth, fuelled by strategic investments and a commitment to delivering value to stakeholders,” the company said.

Updated: February 20, 2024, 1:14 PM