Distressed property fund launched in UAE

source Gulf News

Dubai: Financial and investment advisory services provider, Mayfair Wealth Management (MWM), which is based in the Cayman Islands, Tuesday announced the launch of a new Sharia-compliant distressed property fund, worth $50 million (Dh183.7 million) in the UAE.

The move is thought to be motivated by attractively low valuations in the UAE real estate market, which is undergoing a price correction. The Real Estate Musharakah Notes fund is expected to deliver an annual return of 12 to 15 per cent by way of "leasing or rental income throughout the tenure of the notes, at their best prices", according to a company statement.

The distressed property fund is available for subscription until August 31, with a maximum tenure of 36 months at $1 per share.

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The company said the fund would be used to acquire properties in diverse locations in a bid to mitigate risks.

The number of defaulted or distressed assets have set up an attractive market for such funds. The term "distressed assets" generally applies to those properties whose value is much lower than it should be.

"Typically these types of funds will be some of the first players to enter the market after a downturn and as such they have come to signify the first small steps towards recovery," Matthew Green, Head of Research & Consultancy, CB Richard Ellis Middle East, said.

"In this respect we would anticipate some increased fund activity towards the year end."