By Amit Goenka
Chairman & Managing Director
Nisus Finance
Real estate is one of the key economic drivers in the GCC, especially the UAE. The economy of Dubai is literally driven by the investment and expansion of real estate sector.
According to Statista, a global market intelligence provider, the real estate market in the GCC is estimated to reach a value of US$4.67 trillion (Dh17.1 trillion), more than double the combined Gross Domestic Product (GDP) of the six GCC countries.
However, despite the sky-rocketing success of the real estate sector, real estate funds remain underserved due to lack of institutional participation, few real estate funds, limited awareness, and distribution compared to the sheer nature of buyers who focus on buy and rent to cash in on 6-7 per cent rental returns.
As global financial markets navigate volatility, investors within the UAE as well as global investors are increasingly seeking asset classes that provide stability, consistent returns, and long-term value. Real estate funds are now fast emerging as a dependable investment avenue, offering diversified exposure to property markets while mitigating risks associated with direct ownership.
According to Preqin’s 2024 Real Estate Report, private real estate funds have consistently delivered 9-12 percent annualized returns over the past decade, outperforming traditional stocks and bonds. With the UAE positioning itself as a global financial hub, institutional and high-net-worth investors are turning to real estate funds as a strategic portfolio component.
UAE is seen as an anti-fragile economy benefitting tremendously from the geo political conflicts globally. It has hence seen significant global capital inflows with bulk of it being directed to real estate. But investments need a strong institutional management framework under DIFC or ADGM regime backed by experienced fund managers. A few Real Estate Investment Funds (REITs) have been in the market but did not have the framework and momentum present today in the UAE. Neo investment platforms like crowdfunding, tokenization and fractional ownership models are seeing huge uptick. Critical mass within real estate fund universe in the UAE is still lower compared to global peers – be it as an investor, manager, bank, or distributor – but is changing fast with blue blooded capital entrenching fast post UAE’s FATF grey list exit.
Given the compression and volatility of returns experienced across the USA, Europe and other developed economies, investors are fast getting into well managed real estate funds for strong risk mitigated alpha returns as the UAE real estate market continues to buck the global slow down across asset classes.
Developers are heavily dependent on off plan sales to generate cash flows with limited financing from banks and non-banks. Dependence on debt or equity capital markets, sukuk issuances, sophisticated and institutional financing has been limited so far. This is changing surely with large developers realizing the need for fund backing to ensure financial closure and tide any unforeseen volatilities. While the market is currently fueled by affluent buyers and investors coming from all over the world with liquid cash, the space is shifting fast in favor of real estate funds and institutions allowing for significant returns without the transaction costs.
This is making Real Estate Funds an increasing flavour in the region as a dependable asset class. Historically Real estate funds have demonstrated resilience even in turbulent markets. Unlike equities, which are subject to market swings, real estate investments generate steady rental income and long-term capital appreciation. Real estate funds provide a structured investment approach, ensuring consistent returns through a combination of rental yield and asset appreciation or developmental gains.
Real Estate Funds have a significantly higher bargaining power due to the sheer size and speed without the affiliated costs and uncertainty of capital flows. As asset owners look to pare down their portfolios and generate liquidity, reduce debt and developers look to certainty of project delivery within a strong regulatory framework, real estate funds can quickly gain access to tremendous opportunities unavailable to the retail, family office or non-institutional investor.
Investing in a real estate fund allows diversification across multiple asset types, including commercial, residential, and industrial properties with clearly defined strategies, strong professional management, regulatory framework and best in class practices. This reduces risk exposure compared to directly owning a single property. A well-managed real estate fund balances risk by strategically investing across asset classes, offering investors a hedge against market uncertainty.
Real estate has historically served as a hedge against inflation. As inflation rises, property values and rental incomes typically increase, ensuring real returns are maintained. The UAE’s tax-friendly environment further enhances real estate’s appeal. With no capital gains tax and zero property taxes in Dubai, real estate funds offer superior after-tax returns compared to global markets.
The UAE’s investment ecosystem is designed to support real estate growth. Favorable policies make private real estate funds an attractive vehicle for regional and international investors.
Why UAE Investors Should Prioritize Real Estate Funds
The UAE’s real estate sector has seen record-breaking growth, with the combined real estate transactions of Abu Dhabi, Dubai, Sharjah, Ajman and Ras Al Khaimah exceeded nearly Dh1 trillion, or Dh998 billion (US$271.93 billion) in 2024. The emirate of Dubai recorded over Dh761 billion (US$207.35 billion) in property transactions in 2024, according to Dubai Land Department. These statistics show the abundance of high liquidity and the vibrancy in the real estate market.
Investors are moving to defensive asset classes like real estate in a major way with international family offices and funds redirecting their capital to the UAE in a clear direction of capital moving from West to East.
Dubai’s luxury real estate market continues to see high demand, with prices appreciating 15-20% annually, according to Knight Frank.
It is due to the high potential for the real estate funds, focusing on strong risk mitigated – high alpha returns that Nisus Finance entered this market with an initial US$100 million fund. It is one of the foremost real estate fund managers in global rankings that is smartly capitalizing on the UAE real estate high yield play. Aimed at generating super normal returns compared to peers returns while unlocking capital for banks, asset owners,and developers, Nisus Finance plans to upsize the fund to US$1 billion over the next twelve months on the back of its strong performance and interest from UAE banks, global investors, and institutional participants. This will bring enhanced credibility and further amplify the UAE real estate industry’s growth.
The DIFC licensed fund “Nisus Finance High Yield Growth Fund Closed-Ended” with Gateway Investment Management Services (DIFC) Limited as the Fund Manager and Nisus Finance as the Investment Advisor, with a strong advisory board and investment committee, is offering institutional and private investors exclusive access to high-yield real estate opportunities in the UAE and beyond. The firm’s investment approach focuses on: high-growth real estate assets with strong rental yields; institutional-grade properties with long-term value creation and a structured investment strategy with risk-adjusted returns.
As investors seek safe and profitable alternatives, real estate funds provide the perfect mix of stability, diversification, and growth. The UAE is well-positioned to be a global leader in this space.
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Also read: NiFCO expands investor reach for US$500 mn DIFC property fund, invests US$55 mn in Dubai realty
