UPDATE 3-Dubai eyes property revamp with $1 bln joint fund


Wed Oct 26, 2011 4:02pm BST

* Fund to target investments in Dubai real estate sector

* ICD, Brookfield to each invest $100 mln in fund

* Fund to seek local, regional and international investors

* Dubai’s property sector hurt by oversupply, low demand

(Adds new project announcement details)

By Praveen Menon

DUBAI, Oct 26 (Reuters) – Dubai, whose 2009 property
collapse led to a debt crisis, has launched a real estate
investment fund worth up to $1 billion with Canada’s Brookfield
Asset Management (BAMa.TO) in a bid to revive the battered
sector and restore investor confidence.

The emirate’s main investment vehicle, Investment
Corporation of Dubai (ICD), and Brookfield will each deploy $100
million in the joint fund, UAE state news agency WAM said on
Wednesday.

Dubai’s once-booming property market hit a wall in 2008 and
the decline worsened after the global financial crisis, ending
a massive building spree. Prices are down 60 percent from their
2008 peak.

State-owned developer Nakheel , builder of islands
in the shape of palms, was at the centre of the collapse.
Nakheel, and its parent Dubai World , have
restructured some $41 billion in debt in the past year.

The market can expect more pain with oversupply likely to
delay a price recovery in the Gulf emirate until 2016, ratings
agency Moody’s said.

“It’s clearly a step in the right direction to bring back
some confidence in the real estate market. $1 billion is not a
small size and they (Dubai) can build on the success of that,”
V.Shankar, Standard Chartered’s global chief executive for
non-U.S. operations said at a conference in Dubai.

In a separate announcement, Dubai’s ruler Sheikh Mohammed
bin Rashid al-Maktoum approved new tourism, residential and
commercial projects worth about 2 billion dirhams to be carried
out by the emirate’s real estate development unit.

WIDE CLASS

The fund, with a maximum cap size of $1 billion, will focus
on a wide class of assets in both freehold and non-freehold
areas. It will also seek additional funds from a select group of
local, regional and international investors, the WAM statement
said.

The size of the fund will be capped at $1 billion and it
will have a life of eight to 10 years, the statement said.

“We see this agreement as another big step in our next phase
of growth. It once more affirms Dubai’s attractiveness as a
premier investment destination in this region,” said Sheikh
Ahmed bin Saeed Al Maktoum, the chairman of Dubai’s Supreme
Fiscal Committee and the uncle of Dubai’s ruler.

Market impact of the latest move, however, remained muted
with the property-heavy Dubai stock index trading flat.
Top Dubai developer Emaar Properties rose 0.4 percent
amid low volumes.

“People will be slow to react and assess the impact. They
will also be suspicious of what it means until they read the
details,” said Mohammed Yasin, chief investment officer of CAPM
Investments in Abu Dhabi.

In June, UAE extended visas for real estate investors to
three years from six months in a move to boost foreign
investment.

Brookfield, a property, power and infrastructure investor,
has about $150 billion in assets under management.

ICD holds about $70 billion in assets and its portfolio
includes airline Emirates and stakes in Dubai’s
largest bank, Emirates NBD , developer Emaar Properties
and Borse Dubai.

(Additional reporting by David French and Nadia Saleem; Writing
by Dinesh Nair; Editing by Erica Billingham, Jon Loades-Carter
and Jane Merriman)