Dubai-based property developer Damac plans to buy London office space for the first time in a bet the struggling market will bounce back.
The luxury group, known for developing Donald Trump’s golf course in Dubai, aims to snap up the offices at bargain prices and turn them into plush places to work that meet ESG standards.

“London is still a cosmopolitan city,” Damac chair Hussain Sajwani told the Financial Times. “Demand is there if you find the right asset, the right price, fix it, change the tenant mix, make it more friendly environmentally and push it to a higher end.”

Sajwani did not disclose how much he was planning to spend overall, but said he would look at property on a case-by-case basis with the intention of paying £100mn or £500mn per office, depending on location.

The company will target prime areas, including Mayfair, Victoria and Canary Wharf and favours locations where planning permits are easier to secure.
It will be the first time the group, which also owns Italian luxury fashion house Roberto Cavalli, has bought office space in Europe.

It chose London because of the bargain prices in a sluggish market with vacancy rates rising due to a combination of hybrid working and higher debt costs undermining demand and depressing prices.

Central London office investment volumes were £1.4bn in the second quarter or 60 per cent below the long-term average — the weakest on record except for the second quarter of 2020 at the height of the Covid-19 pandemic, according to CoStar data.

Damac, founded in 1982 and known for its focus on luxury residences and hotels having developed more than 75 towers including the Paramount in Dubai, did not rule out repurposing some of the office space into flats.

It has already dipped its toes into the residential market in London, developing the luxury Damac Tower Nine Elms near Battersea, which was furbished by fashion house Versace and opened to residents last year.

Although demand has fallen for many London offices, analysts say it has held up for high-end, green buildings in top locations, which are in short supply.

Some owners are likely to be forced by lenders to dispose of their offices in the coming months as loans mature and they struggle to refinance their debt because of rising rates, analysts add.

“When it comes to the refinancing point, if there’s just no availability to refinance at the level they are looking for, it might not be your decision anymore,” said Jackie Bowie, head of Europe at Chatham Financial.

Sajwani said he hoped to take advantage of the “softened” market and an upcoming wave of refinancing in order to buy assets that owners can no longer afford to keep.

There was, however, still “a bit more time [to go] for sellers to accept the new reality”, he said, adding that many were not ready to dispose of their assets at market price yet.

“It takes time for people,” he said. “But as time goes by, some of them will find a solution and keep their assets and some of them will have to give up their assets.” He concluded: “For us from the Middle East, London is like a second home: the culture, the language, the rules, the regulation.”