Regional sovereign wealth funds rack up $5.6bn worth of deals

Middle East sovereign wealth funds completed seven major direct property deals worth a total of US$5.6bn last year and more big ticket purchases are expected over the coming months.

Middle East sovereign wealth funds completed seven major direct property deals worth a total of US$5.6 billion last year – and more big ticket purchases are expected over the coming months.

The deals involved commercial, retail and hotel properties.

According to the property broker JLL, the Kuwait Investment Authority sealed the largest middle Eastern sovereign wealth fund deal last year when St Martins, the property division of the Kuwait government, agreed to buy the 13-acre More London office and restaurant complex near London Bridge in London for $2.7bn.

Abu Dhabi Investment Authority, the world’s second largest sovereign wealth fund, sealed the second largest deal for Middle Eastern funds last year when it bought a $712 million portfolio of 31 hotels across Australia from Tourism Asset Holdings.

Abu Dhabi Investment Council (Adic) was third on the list for spending $597m on a series of investments in a portfolio of six Australian shopping malls through the Australian fund manager Challenger.

Other significant deals on the list included Kuwait Investment Authority’s $594m purchase of the 515,000 square foot 5 Canada Square office block in London’s Canary Wharf and its deal to buy the 1200 19th Street office block in Washington DC for $296m as well as Qatari Diar’s $261m deal to buy the W Hotel in Barcelona.

JLL predicted that Middle Eastern sovereign wealth funds would continue to increase their investments in international real estate, both in established world cities as well as in an increasing number of emerging locations.

“This combination of improving domestic economies and the consistent demand for oil and gas will provide Middle Eastern funds and individuals with increasing amounts of capital with which to invest in commercial property globally,” said Fadi Moussalli, head of JLL’s International Capital Group for the Middle East and North Africa.

“With commercial real estate markets continuing to grow and their transparency and sophistication improving year on year, the number of options available to capital rich investors continues to increase,” he added. “While we expect their focus to remain on the core markets of Europe and the United States, key cities in emerging markets are offering a greater number of opportunities for investment.”

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