Dubai Holding, an investment conglomerate owned by the emirate's ruler, plans to list a 12.5% stake in a residential real estate investment trust (REIT), it said on Monday, amid a booming property sector fuelled by foreign investment.

DHAM Investments, a Dubai Holding subsidiary that is selling the stake, is seeking up to $500 million from the offering, two sources with knowledge of the matter told Reuters. Dubai Holding declined to comment.

The company plans to offer 1.63 billion units in leasing-focused Dubai Residential REIT, which manages 35,700 residential properties, according to a statement, including in premium communities like City Walk and Bluewaters.

Dubai, the Gulf region's business and tourism hub, has seen its property market swell since the COVID-19 pandemic, with a sharp rise in prices fuelled by an influx of foreign investors and government residency reforms.

It is a big turnaround from a crushing property crash in 2009 which required a $20 billion Abu Dhabi-led bailout. The government has since taken measures to deleverage and strengthen the sector, and consolidated major state-owned real estate developers.

Malek Al Malek, CEO of Dubai Holding Asset Management, said he was positive about the outlook for the emirate's property market, despite market volatility and uncertainty over the impact of U.S. tariffs on the global economy.

"We see less issues coming from the new supply that is actually pumped into the market," he said on a media call, highlighting Dubai's growing population.

"The REIT...is actually a defensive investment vehicle. So with this volatility, investors usually look for some of these very clear government stories that can yield outcomes," Malek said.

SLOWDOWN

The global IPO market has suffered this year amid rising geopolitical tensions and stock market volatility, and the Gulf region has not been immune, despite a strong pipeline of potential listings.

Dubai Residential REIT would be Dubai's first listing since Talabat in December, and only the second in the UAE this year.

Owned by Mohammed bin Rashid Al Maktoum, Dubai Holding is one of the largest landowners and real estate developers in the United Arab Emirates, comprises some of the emirate's flagship residential, commercial, retail, and tourism assets, including Nakheel, developer of its palm-shaped islands.

Dubai Residential REIT is expected to be the six-member Gulf Cooperation Council's largest listed REIT, with a gross asset value of $5.9 billion.

Trading is expected to begin on or around May 28. The company said it aims to distribute a dividend equal to at least 80% of its profit for the 2026 financial year.

Citi, Emirates NBD and Morgan Stanley are joint global coordinators and joint bookrunners for the IPO.

($1 = 3.6728 UAE dirham) (Reporting by Federico Maccioni; additional reporting by Hadeel Al Sayegh and Manya Saini. Editing by Kim Coghill and Rachna Uppal)