Dubai realty needs to tap institutional funds

With the property market booming in Dubai, many retail investors are re-entering the market buying prime properties at choice locations.

Institutional buying, however, has lagged. In comparison with other locations, institutional investment in Dubai?s realty is minuscule and dominated by local investors and banks. According to a 2012 survey by E&Y, only 4.3 per cent of real estate private equity managers indicated that they are focussed on a Middle East exposure in real estate.

Institutional investors typically invest in income generating assets from a mid to long-term perspective. They target properties in prime centres with cashflows matching to that of a fixed income investment, which is usually achieved by long-term rental leases.

Research indicates that real estate remains the largest block of alternative assets for pension funds, accounting for 55 per cent of alternative assets. Real estate topped the list of investments by sovereign wealth funds from Norway to Qatar last year, rising to 26 percent of the gross from 14 per cent in 2011.

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