Monday, 26 November 2007

Real estate company Nakheel, plans expansion in UK

Nakheel, Dubai company, is the developer of the world's largest islands built, said it will buy British property fund and start a real estate investment trust, or REIT, as it expands in real estate Asset Management.

"UK REITs are trading at a 30 percent to 40 percent discount now, and this is a huge opportunity," the Chief Financial Officer of Nakheel, Kar Tung Quek said Sunday. "There are no REIT market in Dubai so that we are looking for an international portfolio."

Nakheel plans to start its first $ 700 million REIT in the first or second quarter of 2008. The company will put homes from its Gardens and International City in Dubai into the trust, Quek said. The trust will probably sell shares in Dubai and Singapore.

State-owned Nakheel, which has $30 billion of projects under way in Dubai, is to diversify its sources of revenue away from domestic construction projects by the expansion overseas and in fund management. The company, a unit of Dubai World, has about $ 7 billion of assets for its fund venture and will acquire more in January, when they take control of another company Dubai World, Istithmar Real Estate.

The British benchmark FTSE all shares real estate index has slumped 38 percent this year on falling commercial property values, higher borrowing costs and stricter controls on credit.

Dubai real estate returns 12 percent to investors, more than double the yield in Singapore, Quek said. Listing Nakheel first REIT in Singapore would enable the company to take advantage of this city-state experience in trading land trusts and the low cost of financing in Singapore, he said.

Since its founding in 2003, Istithmar has purchased several New York City properties, including hotels. In November 2006 it bought the building in London Adelphi for $ 567 million as part of a plan to capitalize on surging demand for hotel rooms and office space in the major Western cities.