Cayman Islands-based Mayfair Wealth Management, already buying distressed property in Dubai after closing a $50 million fund just days ago, plans to start another fund to snap up battered real estate in the emirate.“We are replicating (the fund) we have closed”, Amani Choudhry, chief executive officer of Mayfair, told Maktoob Business on Tuesday. “Certain people want to come in who have a serious level of interest.”
Choudhry did not say how big the second fund would be and declined to name areas of Dubai where Mayfair’s closed Remnotes fund is snapping up real estate.
“We are being inundated with developers, and now we are seeing that prices are going up,” she said, adding that the fund, which is buying residential property that is at least 90 percent finished, has struck some deals and is negotiating others.
Large parts of Jumeirah Lake Towers, Dubai Silicon Oasis and other newly built areas of Dubai are largely vacant, with many skyscrapers still unfinished.
Experts predict that Dubai could have between 30,000 and 140,000 empty homes by 2011, causing a significant oversupply that could lead prices - already down 50 percent from year-ago peaks - even lower.
However, Choudhry said that even if real estate prices go down next year due to oversupply, Remnotes is a three-year fund and by the time it matures, “the market should be up again”.
Colliers International, a UK-based real estate consultancy, said on Tuesday that while Dubai house prices rose 7 percent in the third quarter compared with the second, prices could head lower next year due to a glut of homes.
House prices in the Gulf emirate have fallen more than 50 percent in the financial crisis that battered its real estate sector. Experts say it is difficult to estimate the worth of distressed property - including unfinished projects - in Dubai but the value of such assets is in the billions of dollars.
Dubai’s second-largest property developer Deyaar, which placed a quarter of its projects in Dubai on hold, has raised half of a $136 million fund primarily to buy back distressed properties from its own portfolio. Its fund will close end of this year.
Florida-based Tate Capital Real Estate Solutions has said it is looking to buy distressed assets in the UAE, and international real estate firm Hines plans to set up a $1 billion distressed asset fund focusing on the UAE.
Choudhry said Remnotes, which closed on Oct. 29, plans a 12 to 15 percent annual return to shareholders.
“We are one of the few and very first independent distressed property funds in the UAE,” Choudhry said. “Some funds that have come out in the UAE are from developers who have put their own distressed properties in their funds. We think that is unfair. It is a disadvantage to the investor.”