Happy Tuesday everyone!

Its a lot of Dubai in the newsletter’s main stories today, but isn’t that name globally on everyone’s mind too? ALL THE TIME?

So, Hedge fund Melqart Asset Management is joining over 100 firms expanding into the emirate, drawn by zero taxes and access to trillions in Gulf capital. Meanwhile, Union Properties' CEO predicts rising construction costs will naturally curb the city's residential oversupply concerns by 2027, potentially stabilizing a market that's surged 75% since 2020. On the private equity front, Gulf Islamic Investments aims to triple assets to $10 billion by 2030, positioning itself as the region's answer to Blackstone amid fierce competition from global giants.

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Markets

Dubai Property CEO Predicts Rising Costs Will Slow New Home Supply

What’s it About?

Union Properties CEO Amer Khansaheb told Bloomberg that escalating construction and land costs will naturally curb Dubai's residential development over the next two years. The publicly traded developer plans to launch 2 billion dirhams ($545 million) in new projects during 2026, adding to its existing 4 billion dirham pipeline. Dubai home prices have surged over 75% since late 2020, driven by overseas investors and global resident influx, prompting developers to launch numerous projects.

Why it Matters?

Dubai faces potential oversupply concerns with an expected annual surplus of 30,000 to 40,000 housing units by 2027, according to Bloomberg Intelligence. This excess inventory could trigger price adjustments despite attractive rental yields. Rising construction costs and land inflation may act as natural market regulators, slowing supply growth and balancing demand. Khansaheb suggests this self-correction will benefit investors by stabilizing the market after years of rapid expansion.

What’s Next?

Developers face mounting challenges managing supply chains and controlling costs while maintaining quality and value. Union Properties sees future opportunities in commercial, industrial, and hospitality sectors beyond residential development. The company's shares have rebounded strongly, more than doubling over the past year to 0.83 dirhams, recovering from previous financial violations by former managers that required extensive operational restructuring.

Hedge Fund Melqart Set To Expand Into Dubai's Booming Financial Hub

What’s it About?

Michel Massoud's London-based Melqart Asset Management, which oversees $1.4 billion in assets, has applied for a license to operate in Dubai International Finance Center. The firm expects to establish its presence by the second quarter with both investment and non-investment staff. Melqart's flagship Opportunities Fund delivered a record 45.1% return last year, driven primarily by special situations trading alongside merger arbitrage and credit strategies.

Why it Matters?

Dubai has emerged as a premier hedge fund destination, now hosting over 100 firms including Citadel, Baron Capital Management, and BlueCrest Capital. The city's appeal stems from zero personal income tax, business-friendly regulations, and a strategic time zone connecting global markets. Access to the UAE's massive wealth pools—$1.8 trillion in Abu Dhabi sovereign funds and over $1 trillion in Dubai family offices—provides crucial capital-raising opportunities for asset managers.

What’s Next?

Melqart joins an accelerating wave of global investment firms establishing Middle Eastern operations, with some choosing dual presences in both Dubai and Abu Dhabi. The competition between the two emirates continues intensifying as they leverage their unique advantages—Dubai's established financial infrastructure versus Abu Dhabi's sovereign wealth proximity—to attract top-tier talent and firms seeking geographic diversification and access to Gulf capital.

Dubai Private Equity Firm GII Aims To Triple Assets To $10 Billion

What’s it About?

Gulf Islamic Investments plans to triple its assets under management from current levels to $10 billion by 2030, positioning itself as the "Blackstone of the Middle East." The Dubai-based firm, which deployed over $1 billion in the past four years, seeks to raise up to $400 million through capital raises and Islamic debt issuance. Founded in 2014 by Mohammed Alhassan and Pankaj Gupta with $5 million, GII has explored acquiring rivals and considers an IPO by decade's end.

Why it Matters?

GII's expansion reflects the Middle East's transformation from capital source to attractive investment destination, despite intense competition from global giants like KKR, Permira, and Brookfield. The regional private equity sector has recovered from 2018's Abraaj Group collapse, which devastated investor confidence. GII's shariah-compliant model and regional expertise position it as a conduit for overseas investors accessing Gulf deal flow, with Saudi Arabia and UAE leading transactions exceeding $500 million despite global uncertainty.

What’s Next?

GII expects to finalize two to three deals in Q1 2026, including a $180 million minority stake in packaging firm Hotpack and a $250 million Saudi private debt fund. The firm plans exits from UK fintech Offa and Indian pharmaceutical investments while pursuing international expansion through strategic partnerships. Co-investing 20-30% in deals alongside institutional clients, GII targets high-profile opportunities across Abu Dhabi, Dubai, and Riyadh's financial hubs.

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🔍In other news…

• Saudi Arabia seeks $58bn to meet 2026 budget deficit

• Dubai to host PropTech Connect Middle East in February 2026

• Qatar to supply Egypt with up to 24 LNG shipments to meet 2026 summer demand

• UAE is set for up to 12 listings in the first half of year, raising billions of dollars, analysts say

• Revenue and occupancy up at Oman’s luxury hotels

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