Damac's $750 Million Sukuk Issuance Reflects Dubai's Real Estate Surge

Damac Real Estate Development has successfully issued a $750 million 3.5-year sukuk, marking its first benchmark issuance in 18 months. The Islamic bond was priced at a 7% yield, tighter than the initial 7.5% guidance, after attracting orders exceeding $2.3 billion. This strong demand underscores investor confidence in Dubai's booming property market.

The issuance, finalized on Wednesday, saw Emirates NBD Capital, HSBC, and JP Morgan acting as joint global coordinators. Additional support came from Abu Dhabi Commercial Bank, Abu Dhabi Islamic Bank, Dubai Islamic Bank, Goldman Sachs International, Mashreq, and Warba Bank as joint bookrunners. Damac intends to utilize part of the proceeds to refinance a $200 million private sukuk that has already been called.

Dubai's real estate sector has experienced unprecedented growth, setting new records in 2024. The market witnessed 180,900 transactions worth AED 522.1 billion, reflecting a 36% increase in volume compared to the previous year. This surge is attributed to heightened buyer confidence and increased developer activity.

Luxury properties have been at the forefront of this boom. Over 4,600 units priced above AED 10 million were transacted in 2024, marking a 23% year-on-year increase. The villa segment outperformed apartments, with luxury villa transactions rising by 33%, while luxury apartments saw a 5% uptick. Premium areas such as Palm Jumeirah, La Mer, and Jumeirah Bay Island commanded the highest prices per square foot, highlighting their appeal to high-net-worth individuals.

The overall value of real estate transactions in Dubai reached AED 761 billion in 2024, encompassing 2.78 million procedures, including both sales and rental agreements. This represents a 17% increase compared to 2023, indicating sustained momentum in the market.

Damac's strategic move to issue the sukuk aligns with the positive trajectory of Dubai's property sector. The company's focus on high-end developments positions it well to capitalize on the growing demand for luxury real estate. Investors, both local and international, are increasingly drawn to Dubai's market, enticed by its robust performance and lucrative opportunities.