The office sector has seen a widening in yields between prime and secondary, with well located, best in class assets still commanding a premium to the wider market and continuing to attract robust interest from investors. 

Investments in logistics and industrial assets continue to be perceived as an attractive proposition by the market, though during the course of the year we saw minimal transaction activity in this sector, mainly due to a dearth of credible investment opportunities. 

Education and healthcare generally remain attractive as investment targets, in part due to the extended lease structures on offer, which are not prevalent in other sectors.

However, with fundamentals in some instances under pressure and some recent insolvencies in this sector we see investors taking a much more granular approach to the covenant strength of the tenant. 

The retail sector continues to face headwinds, though we see a divergence between the wider retail market and well-located community retail with established catchments, which continue to perform reasonably. 

The hospitality market has seen resilience to a degree in occupancy, these Average Daily Rates (ADR) have been under pressure across the UAE. 

Joseph Morris, Partner, Middle East Capital Markets, commented: “The divergence between prime yields and secondary continues to widen, reflecting the fact that investors are willing to pay a premium for assets seen as lower risk, in core locations and with credit-worthy tenants.” 

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