Emirates Reit has let a quarter of its first fully fitted-out floor at Index Tower in Dubai International Financial Centre.
The Sharia-compliant real estate investment trust has bought 17 out of 25 of the building’s office floors, 1,404 car parking spaces and all of its retail units. These were acquired through a series of transactions with Index Tower’s developer, Union Properties, last year.
The trust has completed the 10th floor, which contains 12 offices ranging from 1,279 to 1,588 square feet. The leasable space on the floor is 17,533 sq ft, 25 per cent of which Emirates Reit has managed to pre-let. The company expects to lease the rest soon.
Sylvain Vieujot, Emirates Reit’s executive deputy chairman, said tenants only tend to sign up for fitted-out space once the work is done, and that the offices it has rented out have all been signed “within the past seven to 10 days”.
Fit-outs for a further three floors are now under way, but the company is also letting others as unfinished (shell and core) space.
The next floor to be fitted out will be the fifth floor. It will contain 22 units of about 593 sq ft each and is due to be completed next month. The remaining two floors under fit-out will be completed “by the end of this year, probably in the next quarter”, he added.
He said that he was not sure how many of the floors would end up being fitted out and how many would be rented as shell and core.
“I don’t know if it would be 30 per cent, 40 per cent or even 70 per cent – maybe it would be somewhere in the middle. Both I think will do well.”
However, he added that the valuations so far on fitted out space have made it a worthwhile endeavour.
“When you look at valuations for a building of this quality, the net yield is usually below 10 per cent. We think we can achieve rents in excess of 10 per cent.
“If you buy an asset with the quality of Index Tower in London or Paris, the net yield is closer to 3 per cent. This is not the case in Dubai, of course, but I think the quality of the building is very high.”
In its latest Dubai office report for the first half of this year, Knight Frank said that rent levels for fitted out space in DIFC remained steady at Dh2,530 per sq metre, compared to Dh1,991 per sq metre in Downtown Dubai and Dh1,615 for offices fronting Sheikh Zayed Road or in Dubai Internet City.
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