Dubai's Five Holdings debuts the city's first hospitality-focused REIT worth $571 million

Dubai-based real estate development and hospitality group Five Holdings—formerly Skai Holdings—has established a $571-million real estate investment trust—the region's first REIT completely focused on hospitality.

According to the TradeArabia, the REIT will include Five Holdings' $1.7-billion Viceroy Dubai Palm Jumeirah and its $349-million Viceroy Dubai Jumeirah Village, which is now 40 percent complete and opening mid-2018. Properties from around 60 investors will also be included, and additional projects will be added as the group announces or purchases them. All future projects are subject to compliance with regulatory requirements. Abu Dhabi Global Market and the Financial Services Regulatory Authority will regulate the trust.

The company's new name and philosophy reportedly derives from the five elements and reflects the firm's continued ambition to increase its current $2-billion property inventory. "Real estate is a major contributor to the UAE economy and Five Holdings continuously looks at new ways to innovate and ensure that our investors have more avenues to investing their money," Kabir Mulchandani, the chairman and CE of Five Holdings, told TradeArabia. "Owning units in a REIT instead of holding the title to a physical asset means investors will be able to buy and sell at a lower cost and with more flexibility. Investors will be able to monetize faster in a public offer by owning units within a REIT as opposed to a physical asset."

REITs issue securities as shares that invest in income-generating real estate, such as mortgages. These may be traded like a stock when offered to the public. They also allow investors to have an underlying stake in real estate. In turn, they allow investors to diversify their exposures and investments and to benefit from long-term capital appreciation. “REITs offer a compelling investment vehicle where risk is spread across a number of real estate propositions under one portfolio," Mulchandani added. "This is the beginning of a wave, and I envision the UAE REIT industry to be hundreds of billions of dirhams over the next 10 years."