Fahad Al Shamlan
Position: Investment and acquisitions Manager at Kuwait Real Estate (Aqarat)
Years in industry: 12 plus
What asset class and geography are you focused on?
Internationally, our focus remains on mature markets, primarily the US and UK. We feel that with the resurgence of the US economy, supply in certain sectors of the real estate market has lagged behind demand due to the hesitancy of some investors to make significant capital outlays in what remains a volatile world economic situation. With regards to asset classes, we take a more opportunistic approach then many of our regional competitors. We tend to try and identify gaps in the market and act upon any value opportunities, be it on the development or income-producing end.
What is the outlook for the month/year ahead?
Job growth, consumer confidence and access to attractive credit are the primary drivers for our industry. Provided we continue to see growth in the US economy, we’re optimistic that the real estate market will continue to move in a positive direction in 2015 with regards to our international investments. Locally, we are more cautious due to the volatility of the energy markets; a sustained depression of oil prices would most certainly lead to a slowing of the local and regional economy. That, coupled with the already inflated local real estate prices, will probably see us take a wait-and-see approach to any new major investments in Kuwait.
What are the main risks either upside or downside to the outlook?
The primary risk moving forward in 2015 relates to the above-mentioned volatility of the energy sector. Fortunately, for Aqarat, in this regard there is a negative correlation between our local and international investments, providing us with needed diversification. Continued low oil prices will spur further investment in mature markets while stunting growth locally. Also, the local market could actually benefit from the investment hiatus caused by the dip in oil prices and we could see a renewed investment resurgence following what we anticipate to be a cool-down in the coming months in the real estate market in Kuwait.
What is the best investment at the moment?
As opposed to the past few years which saw us enter into capital preservation investments in the form of low-yielding income producing assets due to the uncertain economic outlook at the time, we feel the current environment affords more opportunity on the development side in sectors ranging from multi-family housing, industrial warehousing as well as hospitality.
What was the best investment you were involved in?
Thankfully, we have been fortunate to be involved in many profitable investments over the years. Most recently, I would point to our acquisition and subsequent exit from a portfolio of single tenant retail assets we held in the US. We were fortunate enough to enter at a point in which we identified an opportunity to invest in properties leased to credit rated tenants at attractive cap rates. As with any good investment, the key was being able to enter, and just as importantly, exit at the correct time.
What was the worst?
Historically, as a group, we have been heavily involved in emerging markets which have seen large amounts of political and economic risks. While it’s difficult to identify a single “worst” investment, the period following the Arab Spring in 2011 was difficult when it comes to some of our assets in those countries that were affected.
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