DUBAI 9 October 2019: The apparent bottoming and turnaround of logistics and industrial real-estate is an optimistic sign for Dubai real-estate and could be a leading indicator that market conditions are improving broadly, according to a real estate investment fund.
Concerns about oversupply of residential developments has led investors to remain cautious about how their real-estate portfolio is allocated, said representatives of Manrre Real-Estate Fund, managed by Dalma Capital.
For most investors, the logistics and industrial real-estate market is difficult to access as it requires specialized expertise and has high barriers to entry – a problem which Manrre was established to help address.
Taking advantage of deflated prices
Whilst bright spots have emerged in these specific sectors, the overall market remains troubled. “Cash is king in the market today,” says Kunal Lahori, a director of Manrre.
The logistics and industrial real-estate sectors are benefiting from the regional e-commerce boom underpinned by the launch of Noon and Amazon.ae.
“As we have seen in other markets, when retail spending behavior shifts to online shopping, real-estate demand shifts from retail centers to warehouses,” explains Zachary Cefaratti, CEO of Dalma Capital.
The 21st century mall is an Amazon fulfillment center. Other trends in the burgeoning tech sector also create opportunities for industrial real-estate, such as the proliferation of datacenters and mass-adoption of apps such as Deliveroo – a tenant of the Manrre Fund.
The Manrre Real-Estate Fund closed its first year with strong yield and capital appreciation on its Dh215 million portfolio – a stark contrast to market sentiment and the performance Dubai’s other real-estate funds.