Is now the time to Buy Commercial Investments?

May 27, 2019
Written by Jason Hayes

Negative market commentary is not getting in the way of commercial transactions happening in the UAE’s office and commercial real estate sector. 

Recent activity has incuded the  Dh2.2 billion deal which saw ADNH (Abu Dhabi National Hotels) acquire Emaar Hospitality’s hotel assets in Dubai in addition ENBD Reit paid Dh280 million for the Edge Building in Dubai Media City at a net initial yield of 6.5 per cent

In Abu Dhabi Aldar Investments announced that it will be picking up ownership of the Etihad Plaza and Etihad Airways Centre. The value of the deal - Dh1.2 billion, and which will “enable Aldar Investments to recognise annualised annual net operating income of Dh0.1 billion”.

Commercial Deals are indeed happening despite the volatility and price sensitivity of the Oil market. 

Market sentiment suggest that the office market is going through a torrid time. Office leasing enquiries continue to be weak with businesses tending to stay put in older leased premises - at lower rents - than move into a high-profile address. Office clients are busy saving on their costs where possible so investors in office buildings need to be sure they have the tenants lined up for those properties.

But of course every cloud has a silver lining, the market is awash with opportunities to acquire assets at significant discounts to historic valuations. 

In recent months we have seen new institutional investors entering the market, with the intention of creating real estate funds – both private and listed and with asking prices dropping as sellers adjust expectations given current market conditions we are seeing deals being written as asking prices are now somewhat more realistic to the pricing levels that can be achieved... It feels like the time to buy.