Eshraq and Mubadala team up for Abu Dhabi plot developments

Eshraq Properties and Mubadala Development Company are teaming up to develop plots on Abu Dhabi’s Reem and Al Maryah Islands.

Eshraq said yesterday in a filing that the joint venture company would develop land plots in Abu Dhabi owned by Mubadala on Al Maryah Island and by Eshraq Properties on nearby Al Reem Island.

The pair said that they would only disclose the locations of the plots once the joint venture company had been fully established.

“As a strategic investment company and the master developer of Al Maryah Island, we are looking for experienced partners who can support our wider strategy and bring the right credentials to these projects,” said Ali Eid AlMheiri, executive director of Mubadala Real Estate and Infrastructure.

Eshraq owns three main land assets including a sizeable chunk of Reem Island close to Al Maryah Island.

The developer started selling 500 apartments in a planned residential and office towers project dubbed Marina Rise in 2007. But the company was hit hard by the global financial crisis and for the past decade Eshraq instead concentrated on operating a hotel in Dubai and selling some of its smaller land plots on Reem Island.

However, last year the company received a new lease of life when Jassim Alseddiqi, the managing director and chief executive of the powerful Abu Dhabi-based alternative investments company Abu Dhabi Financial Group (ADFG), was appointed Eshraq chairman.

ADFG is also Eshraq’s second largest shareholder.

Eshraq said that the appointment of Mr Alseddiqi had enabled it to “establish a strong financial footing and lay out a new growth strategy.”

In January the company said it would press ahead with three major projects: Jumeirah Rise in Dubai; Marina Rise, on Reem Island; and a mixed-use project Gateway, between the Maqta and Sheikh Zayed bridges in Abu Dhabi.

Mubadala, the Abu Dhabi strategic investment company, which is in the process of merging with International Petroleum Investment Company, owns Al Maryah Island and acts as the master developer of the island, which is also the location of a new financial free zone.

However, local property agents say that over the past four years the company has been working to reduce its exposure to domestic real estate development.

lbarnard@thenational.ae

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The Outsider

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Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.

Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.

“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.

Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.

“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.

Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.

From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.

Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.

BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.

Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.

Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.

“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.

Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.

“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.

“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”

The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”

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