Page 76 - UP PR REPORT - JULY 2025

7/3/25, 9:32 AM Real Estate Investment Trusts Are Moving To Centre Stage
By year-end, he said GCC Reits could reach $16–17 billion, with UAE returns holding solid between 7% and 8%, barring external shocks.“For Dubai specifically, more listings,
deeper investor penetration, and consistent income flows could position Reits as a central pillar in the region's real estate investment universe,” he said.

Growth Drivers
Dhar elaborated growth drivers for Reits in the UAE and said it starts with a regulatory vision as the UAE has refined its Reit framework and introduced Shariah-compliant
structures, dramatically reducing barriers to entry.“Dubai Residential Reit, the first pure-play residential listing, stands as proof that the system works, enabling investor-grade
transparency, governance, and efficiency. That foundation is critical; without it, these investments would remain illiquid and riskier,” he said.

Referring to latest data by CBRE and Central Bank of the UAE, he said the UAE non-oil GDP is forecast to grow between 4.7% and even above 6% in 2025, bolstered by
tourism, trade, and an expanding population.

“Add surging rent inflation, especially in Dubai's hotspots, where rents are up anywhere from 12% to 20% year-on-year basis, and occupancy rates around 97%, and suddenly
you've got a compelling yield story. Investors craving defensive, income-generating assets in volatile markets are naturally drawn to Reits delivering 6–8% yields with inflation
protection baked in.

Dhar said the first half of 2025 was nothing short of historic for the UAE's Reits. “Dubai Residential REIT opened the IPO doors, raising Dh2.145 billion ($584 million), floated
about 15% of its unit capital, and landed with a base portfolio of roughly 35,700 units boasting 97% occupancy. With an expected yield of 7-8% for the year and strong cash
flow visibility, the message to markets was loud and clear: we have a product that works, delivering stable income in a transparent, regulated vehicle,” he said.

“As for second half of 2025, I'm staying cautiously optimistic. If global rates chill or at least plateau, and UAE fundamentals, GDP growth, rental momentum, and foreign
investment hold steady, the second half will likely build on second quarter's momentum. The first dividend, expected around September, is pegged at Dh1.1 billion or 80% of
profits, reinforcing credibility. And with investor appetite for resilient yield assets running high, I believe we're entering a phase where those initial successes turn into sustained
investor literacy and market expansion,” he added.

Challenges for Reits

Rising global real yields pose a challenge, according to Dhar.“If central banks pivot aggressively, Reit valuations could feel the squeeze as more income flows toward fixed-
income alternatives. That said, any pivot towards lower rates would be a fresh catalyst for valuation rerating in Reits, potentially sending multiples higher.”

Dubai's rapid development trajectory may lead to rental oversaturation post-2027. Maintaining that high occupancy level and the resulting healthy yield will mean rigorous
asset and tenant management, alongside strong cost controls.

“Finally, diversification remains a gap. Right now, residential dominates, but for Reits to truly mature, we'll need more office, retail, hospitality, and logistics vehicles, backed by
regulatory nuance and a broader pipeline of listings,” Dhar concluded.

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