Binghatti Capital reports 194% net return from Dubai development fund

Real estate investment funds are creating new avenues for capital deployment in Dubai’s property sector, enabling investors to share in returns while supporting project development, according to industry participants.

Binghatti Capital Limited, an investment manager regulated by the Dubai Financial Services Authority (DFSA), announced that its Binghatti Pinnacle Development Fund achieved a net internal rate of return (IRR) of 194% and a net multiple on invested capital of 2.3 times for external limited partners. These figures are calculated after deducting applicable fees, fund expenses and management carried interest.

Fund performance and project details

The fund raised approximately $29 million and deployed the capital through a strategy focused on developing a single real estate asset for sale. The project was a mixed-use development comprising 178 units with a total development value of around $115 million.

About 90% of the units were sold before the project’s completion, and contracted sales exceeded $90 million, indicating strong demand during the construction phase.

The fund has now completed its investment plan and made distributions to its partners. It is currently undergoing formal liquidation procedures, subject to final regulatory and administrative requirements.

How development funds operate

Real estate development funds pool capital from investors and direct it toward constructing new projects or completing existing ones. Returns are typically generated through the sale of property units upon completion or during the development process, depending on the fund’s strategy and terms.

These vehicles differ from real estate funds that acquire existing, income-producing properties. Development funds follow an investment cycle that begins with identifying an opportunity and conducting feasibility studies, followed by capital allocation, construction and marketing, and finally the sale of the project and distribution of proceeds to partners. Some funds focus on a single project, while others diversify across several projects or locations to reduce reliance on any one asset.

Performance depends on factors such as land, construction and financing costs, adherence to timelines, sales velocity and achieved sale prices. Returns are also influenced by changes in market conditions and demand, making risk and liquidity management, along with exit timing, essential to investment success.

CEO comments on discipline and execution

Shahzad Janab, Chief Executive Officer of Binghatti Capital, said: “Success in development investing requires discipline throughout the investment cycle, from evaluating opportunities and deploying capital to construction, sales and distributions. The net internal rate of return of 194% and net multiple on invested capital of 2.3x reflect the value created by the Pinnacle Fund and the speed at which capital was returned to investors. Maintaining execution momentum amid rising regional uncertainty was a key factor in achieving this outcome.”

Binghatti Capital, the investment management and capital markets arm of Binghatti, manages real estate investment strategies and provides investment and advisory services across real estate, private credit and capital markets.