Emirates Reit adds to DIFC tower stake
Emirates Reit is extending its footprint in Dubai’s financial hub after snapping up another chunk of the Index Tower
Dubai’s first publicly traded real estate investment trust paid Dh17.9 million to acquire another 11,870 square feet of office space in the building from the Egyptian investment bank EFG Hermes.
It represents about half of the eighth office floor of the tower, located in the Dubai International Financial Centre.
Emirates Reit said that the move was part of a long-term strategy to buy up space in the building.
The Reit, which floated on Nasdaq Dubai after a Dh643.65m initial public offering in April, now owns 17 out of the 25 office floors, 1,426 car parking spaces and the whole retail component of the Index Tower.
“This comes as part of Emirates Reit’s strategy to increase its ownership in Index Tower, its flagship asset,” the company said in a statement to Nasdaq Dubai.
In June Emirates Reit spent more than Dh600m buying 15 floors of the tower from Emirates NBD Properties for Dh613.5m – its largest acquisition to date.
Local agents report that office rents in the area stand at about Dh150 to Dh180 per sq ft.
Unlike many other parts of the world where office blocks are usually bought and sold as single entities, many developers in Dubai sell small office units off-plan to investors under a system known as strata title in almost the same way that apartments are marketed.
However, office values tumbled and vacancy rates in the emirate rocketed after the Dubai property market crashed in 2008. Larger corporate occupiers eschewed strata office blocks in which they would have had to negotiate with dozens of different landlords, creating a two-tier market in which rents for buildings under single ownership can be far higher than their strata counterparts.
“With Emirates Reit in control of two-thirds of the office space in Index Tower, most corporate occupiers wouldn’t consider it to be a strata building,” said Ian Albert, the regional director for the Middle East at Colliers International.
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Published: December 8, 2014 04:00 AM