Launch Partners

Launch Partners

Dubai’s office market poised to boom with potential rental growth in 2024

As demand continues to outstrip supply, the Dubai property market experienced a rental growth of 17.6% in 2023, according to Equitativa Group, which expects additional potential rental growth this year. As of Q4 2023, average rental rates stood at AED490 (US$133.4) per sq ft.

The REIT manager projects that in the next 12 to 24 months, the office market will probably be the strongest asset class in the Dubai property market due to a supply shortage.

During a recent earnings call, Thierry Delvaux, CEO at Equitativa Group which manages the Shariah compliant Emirates REIT, elaborated: “As long as vacancies stay below 10%, we will continue to see rental growth. We are fortunate to have a lot of office assets in our portfolio.” 

The observation comes as Emirates REIT reported one of its strongest performances since its founding in 2010. Total property income for the 2023 financial year increased by 10% year-on-year to US$74 million, its highest value ever while net asset value surged by 34% to close at US$500 million. The REIT generated a 55% profit gain to US$127 million while unrealized gain on revaluation of investment properties amounted to US$133 million, up almost 69%.

Occupancy of Emirates REIT’s largest asset, Index Tower, increased by 1.4 percentage points to 87.8%. The rental take-up was particularly strong, increasing by 10.2 percentage points to 58.7%. Across its portfolio, occupancy rose 1.7 percentage points to 86% in 2023.

“Many current contracts were signed during COVID-19 and now we are starting to see the benefits from renewing these rents. Our rental rates have increased quite significantly. We expect this to continue and to earn a good dividend,” shared Thierry.

This is quite a comeback for the Islamic REIT having faced some scandals in recent years.

In 2021, Remi Ishak, a former CFO of Equitativa and Emirates REIT, was fined AED122,000 (US$33,220) by Dubai Financial Services Authority (DFSA) for making misleading statements in relation to the Emirates REIT, not preparing financial statements in accordance with International Financial Reporting Standards and failing to ensure that relevant information was reported to its auditors. In response to whether the DFSA action had any impact on the group, Thierry replied that the market recognizes Emirates REIT as a very resilient business and this action will not have a major impact.

The Islamic REIT manager this year will potentially dispose assets and focus on proper refinancing to boost its financial performance. Funds from operations (FFO) were negative in 2023 due to high financing cost as benchmark rates rose. The US$380 million Sukuk it refinanced at the end of 2022 were also at a high rate – 9.5% a year from 5.13% previously.

Thierry believes Emirates REIT could return into positive FFO territory this year. It is looking at cheaper alternative refinancing avenues. Also, a positive cash flow, which has supported the fund’s valuations by US$130 billion, would likely have a positive impact on its future bottom line.


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