Meraas and Brookfield form Dh5bn retail property joint venture

Retail assets it will own and operate include The Beach, City Walk and La Mer

DUBAI, UNITED ARAB EMIRATES. 16 APRIL 2018. Walk through preview of Laguna Waterpark at La Mer by Meraas at Jumeirah beach. (Photo: Antonie Robertson/The National) Journalist: Hala Khalaf. Section: Weekend.
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Meraas Holding entered into a Dh5 billion joint venture with Canada's Brookfield Asset Management to manage and grow a portfolio of retail assets.

The deal "represents a significant investment in the region" for Brookfield with $385bn (Dh1.4 trillion) of assets under management, the company said in a statement. It also represents Brookfield's first regional retail deal.

The joint venture will hold retail assets developed by Meraas at a number of projects including La Mer, City Walk and The Beach in Dubai. The company did not indicate whether it includes units in any of Meraas's ongoing developments such as the Dubai Harbour project, nor did it give details as to how much equity each partner will hold in the venture.

Meraas did not immediately respond to a request for comment.

“We are delighted to form this partnership with a leading asset manager such as Brookfield. We hope this is the start of a fruitful relationship," said Meraas Holding's chairman, Abdulla Al Habbai.

The partnership "aims to leverage Meraas's regional brand recognition and experience in curating lifestyle-focused mixed-use developments", coupling it with Brookfield's global experience of managing retail assets.

Meraas has a portfolio of about 7.5 million square metres of land and more than 1,400 retail units spread across 15 developments. Over the past decade, it has built major, mixed-use projects including City Walk, La Mer and Bluewaters Island, as well as resorts including Pearl Jumeira and Jumeira Bay. The developer also owns a majority stake in theme parks operator DXB Entertainments.

Brookfield's real estate arm manages about 42 million square metres of space with a value of $194bn. It has already invested in Dubai alongside sovereign wealth fund Investment Corporation of Dubai in ICD Brookfield Place – a 102,193 square metres mixed-use tower nearing completion in Dubai International Financial Centre.

The joint venture will "source and execute retail-orientated opportunities across the region", the statement said.

"We believe in the future of the Dubai real estate market and look forward to working together with Meraas to create the leading retail player in the regional market while also exploring value creation opportunities throughout the assets," said Brian Kingston, chief executive of Brookfield Property Group.

According to consultancy JLL's UAE Real Estate Market Q2 report, Dubai's retail property market faces more of an oversupply than any other sector. At the end of June, the city had 3.8 million square metres of mall-based retail space, with a further 1.6 million square metres set to be added by the end of 2021. Retail rents in primary malls dropped by 14 per cent year-on-year in the 12 months to June 30, and vacancy rates increased to 18 per cent, from 14 per cent a year earlier.

Mall operators also face changing consumer trends with more spending moving to online retail, but are "constantly looking for new strategies to boost dwell time, operating performance and the tenant mix of their projects", JLL said.