IIB launches $65m property fund in Abu Dhabi project


Bahrain, The Bahrain-based International Investment Bank announced the launch of a 65-million-dollar property fund to invest in the Danet Abu Dhabi master development project.

The new fund, IIB-Abu Dhabi Properties 1, will be 66.7 per cent owned by IIB with the remaining 33.3 per cent owned by the UAE-based United Friends Company (UFC).

The fund will purchase two plots of land at Danet Abu Dhabi to develop a 21-storey twin-tower building.One of the towers will house office units and the second will house both residential and office units. The building will also include retail and entertainment units and car parking. The office and residential units will be let initially and then sold.

The fund will exit from the investment within four years and is targeting an Annual Internal Rate of Return (IRR) of 24 per cent.

IIB chairman Saeed Abduljalil al-Fahim pointed out that Abu Dhabis population growth, which is expected to grow by 6.9 per cent between 2006 and 2010, is driving a need for new housing units.

Demand for state-of-the-art office units remains strong, and despite the upcoming supply, market projections indicate high demand and occupancy rates will continue in the coming years. Both office and residential markets have seen increases in property value as well as rent. Rental rates for the residential market in prime areas have increased by 22% from 2005 to 2006.

It is projected that residential rents are likely to rise at around 10-12% annually for the next three years. Equally, it is expected that commercial rents will increase by 10-12% annually for the next two years.” Explained his Excellency, Mr.Saeed Abduljalil Alfahim, Chairman of the International Investment Bank.

"We believe the Abu Dhabi real estate market offers the potential for superior returns for our investors,” said Aabed Al Zeera, CEO of IIB, commenting on the launch of the new fund.

He said, “With the recent strong trends in property valuations and rental growth in Abu Dhabi, and with these trends forecast to continue in both the office and residential markets, now is the right time to invest in a project such as Danet Abu Dhabi. Population growth, demand and government policy are creating an ideal environment for future growth."

"In addition, Danet Abu Dhabi will be one of region’s best-planned communities and will meet the growing demand for sophisticated mixed-use projects. Its location close to downtown Abu Dhabi will also make it a very attractive investment,” concluded Aabed Al Zeera.

The reports on Danat Abu Dhabi come after IIB's recent 98 million dollar acquisition of three commercial properties in Munich, Germany, and the acquisition and management of a high quality real estate portfolio in France, valued at 105 million US dollars.

The news of the Danat Abu Dhabi fund follows IIB’s recent $98 million acquisition of three commercial properties in Munich, Germany, as well as its acquisition and management of a high quality real estate portfolio in France, valued at US$105 million.