Real Estate Investment Trusts Are Moving To Centre Stage

The UAE Real Estate Investment Trusts (Reits) have a promising outlook as it offer investors a way to tap into prime real estate without the hassles of direct ownership, says an expert.

Madhav Dhar, Founding Member, and COO of ZāZEN Properties, said the emirate's Reit market received a big boost from the recent initial public offering launched by Dubai Holding to raise Dh14.3 billion, offering up to 8% gross yield.

“The UAE Real Estate Investment Trusts (Reits) are moving to centre stage. Take Dubai Residential Reit's blockbuster debut on May 28, 2025, it launched with a market cap of Dh14.3 billion and an expected gross yield of 7-8%. It was oversubscribed 26 times on demand, exceeding Dh56 billion, proving investors are seeing real value here, and that made a spectacular debut,” Dhar told BTR.

“This isn't just about yield, though the 7-8% return is certainly helping; it's about embracing transparency, regulatory maturity, and liquidity in a market that's ready to evolve and expand in the future,” he said.“This is more than just a one-off success; it's the beginning of a narrative shift. We're moving away from discretionary, high-risk, off-plan bets to structured, Shariah-compliant, long-term income strategies. The UAE Reits now offer investors a way to tap into prime real estate without the hassles of direct ownership. They're delivering yield, governance, and fluidity, and doing it with a level of sophistication that sets them apart in the region,” he explained.

To a question about the prospects of Reits in the region, he said GCC Reit assets under management are forecast at around $11.2 billion in 2025 and expected to reach $16.7 billion by 2030, projecting a robust 8.2% compound aggregate growth rate.“These numbers highlight a market that's taking shape, but still has real runway ahead. The UAE, and specifically Dubai, remains the central hub within that evolution,” he said.

By year-end, he said GCC Reits could reach $16–17 billion, with UAE returns holding solid between 7% and 8%, barring external shocks.“For Dubai specifically, more listings, deeper investor penetration, and consistent income flows could position Reits as a central pillar in the region's real estate investment universe,” he said.

Growth Drivers

Dhar elaborated growth drivers for Reits in the UAE and said it starts with a regulatory vision as the UAE has refined its Reit framework and introduced Shariah-compliant structures, dramatically reducing barriers to entry.“Dubai Residential Reit, the first pure-play residential listing, stands as proof that the system works, enabling investor-grade transparency, governance, and efficiency. That foundation is critical; without it, these investments would remain illiquid and riskier,” he said.

Referring to latest data by CBRE and Central Bank of the UAE, he said the UAE non-oil GDP is forecast to grow between 4.7% and even above 6% in 2025, bolstered by tourism, trade, and an expanding population.

“Add surging rent inflation, especially in Dubai's hotspots, where rents are up anywhere from 12% to 20% year-on-year basis, and occupancy rates around 97%, and suddenly you've got a compelling yield story. Investors craving defensive, income-generating assets in volatile markets are naturally drawn to Reits delivering 6–8% yields with inflation protection baked in.

Dhar said the first half of 2025 was nothing short of historic for the UAE's Reits. “Dubai Residential REIT opened the IPO doors, raising Dh2.145 billion ($584 million), floated about 15% of its unit capital, and landed with a base portfolio of roughly 35,700 units boasting 97% occupancy. With an expected yield of 7-8% for the year and strong cash flow visibility, the message to markets was loud and clear: we have a product that works, delivering stable income in a transparent, regulated vehicle,” he said.

“As for second half of 2025, I'm staying cautiously optimistic. If global rates chill or at least plateau, and UAE fundamentals, GDP growth, rental momentum, and foreign investment hold steady, the second half will likely build on second quarter's momentum. The first dividend, expected around September, is pegged at Dh1.1 billion or 80% of profits, reinforcing credibility. And with investor appetite for resilient yield assets running high, I believe we're entering a phase where those initial successes turn into sustained investor literacy and market expansion,” he added.

Challenges for Reits

Rising global real yields pose a challenge, according to Dhar.“If central banks pivot aggressively, Reit valuations could feel the squeeze as more income flows toward fixed-income alternatives. That said, any pivot towards lower rates would be a fresh catalyst for valuation rerating in Reits, potentially sending multiples higher.”

Dubai's rapid development trajectory may lead to rental oversaturation post-2027. Maintaining that high occupancy level and the resulting healthy yield will mean rigorous asset and tenant management, alongside strong cost controls.

“Finally, diversification remains a gap. Right now, residential dominates, but for Reits to truly mature, we'll need more office, retail, hospitality, and logistics vehicles, backed by regulatory nuance and a broader pipeline of listings,” Dhar concluded.

What is Reit

A company that owns, operates, or finances income-generating real estate business.

Benefits

> Diversification

> Real estate can be a great investment

> Easy to buy

> Low minimum investment

Categories

• Equity invests in properties

• Mortgage invests in mortgages

• Hybrid invests in both segments

Reit Cycle

> Company acquires properties

> Properties generate income

> Investors buy shares

> Dividends shared with investors

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