Dubai-based Rasameel Investment House (RIH) says it is acquiring a labour housing complex in the emirate’s Muhaisnah area in a $24 million Sharia-compliant real estate deal.
The property spans an area of 6,000 sqm and comprises four buildings, in addition to a restaurant and a supermarket. It includes 540 rooms that are all leased through a renewable three-year contract, RIH said in a statement.
The deal will yield an annual cash return of up to 12%, which will be distributed monthly with an average expected internal rate of return (IRR) of 14% upon sale, said Rashed Al Rashed, general manager of RIH, which is the investment arm of the Rasameel Structured Finance Company.
“We are pleased with the success of this deal, which attracted us to the revival of the Dubai real estate market, and the increased demand on labour accommodations,” Al Rashed said. This increased demand “is primarily due to the continued property development in Dubai, particularly after having been awarded the opportunity to host the Expo 2020”, he added.
Real estate projects that have been completed in Muhaisnah have already taken up approximately 95% of available space at the location, Rashed said in the statement, indicating that the probability of building new labour accommodation in the future is very limited. “This will lead to an increase in prices, based on heightened demand and limited supply,” he added.