Saudi investors keen on real estate and looking abroad

Dubai Marina by night: The UAE is the preferred market for 28 percent of GCC investors. (AFP)
Updated 20 June 2018
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Saudi investors keen on real estate and looking abroad

  • Many Saudis are looking outside the Kingdom for opportunities in the property market, according to a new survey of investment patterns among residents.
  • Some 85 percent of Saudi residents have invested in property at some stage, but over half of respondents are considering putting their cash into international real estate.

DUBAI: Most investors in Saudi Arabia are committed to real estate as their main investment vehicle, but many are looking outside the Kingdom for opportunities in the property market, according to a new survey of investment patterns among residents.

Some 85 percent of Saudi residents have invested in property at some stage, but over half of respondents are considering putting their cash into international real estate, the survey, by market research firm YouGov on behalf of British property developer Select Property Group, reveals.

“Investor confidence is only further evidenced by the frequency in which investments are being made. The results found that almost a quarter (23 percent) of investors based in Saudi Arabia look to make a new investment at least every three months.

“Respondents were asked to consider their previous and potential future investments in bonds, stocks and real estate – both domestically and internationally – as well as mutual funds, bank products, gold and precious metals, cryptocurrency and fine art. Across every category, respondents demonstrated a desire to increase their level of investment in the coming years,” the report said.

 

Despite cryptocurrency being in its relative infancy as an asset, 5 percent of respondents based in Saudi Arabia declared they have already spent over $500,000 in the digital currency, though investment levels collectively still trail far behind more traditional asset classes, such as real estate.

The Saudi Arabian Monetary Authority has warned of the “risky and speculative” nature of crypto-currencies like Bitcoin, while welcoming blockchain as an innovative financial technology.

“The results show that investors in this region are highly motivated and it’s interesting to see the mix of key investment choices among the varying demographics. It’s promising to see that Saudi Arabia residents are also inclined to make regular investments, constantly keeping an eye on the market and looking to capitalize on the latest opportunities,” said Adam Price, managing director at Select Property Group.

Investors in Saudi Arabia and the UAE accounted for the highest proportion of the “very knowledgeable” category in the survey.

In the wider Gulf, most investors looking at overseas property were interested in residential real estate (44 percent) with 27 percent eyeing commercial property.

The UAE is the preferred market for 28 percent of GCC investors, with 16 percent interested in the US and 8 percent naming the UK as their preferred destination. Some 11 percent looked favorably on Turkish real estate.

An earlier version of this story incorrectly stated that the Select Property Group survey found that 1 percent of GCC property investors said the UK was their preferred market. The correct figure is 8 percent. This has been amended in the above text.

FASTFACTS

The Saudi Arabian Monetary Authority has warned investors of the “risky and speculative” nature of crypto-currencies such as Bitcoin.


UAE regulators ask corporates to declare exposure to Abraaj

Updated 21 June 2018
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UAE regulators ask corporates to declare exposure to Abraaj

  • Air Arabia admits $336 million exposure to Abraaj funds.
  • Abraaj sells its Latam, Sub-Saharan Africa, North Africa and Turkey Funds to Colony Capital.

DUBAI: The United Arab Emirates’ top securities regulator has asked UAE-listed companies to declare their exposure to Dubai-based private equity firm Abraaj, which filed for provisional liquidation last week.
The Securities & Commodities Authority sent a letter earlier this week and companies had until Thursday to submit their responses, Obaid Al-Zaabi, chief executive of the regulator, told Reuters.
Air Arabia, a Dubai-listed low-cost carrier, said this week that it had a $336 million exposure to Abraaj, which is the Middle East’s biggest private equity firm. Shares in the airline plunged because of these links.
Al-Zaabi said some companies in the UAE had exposure to Abraaj, without naming them.
A court in the Cayman Islands, where Abraaj Holdings is registered, ordered this week that PwC be appointed as provisional liquidators of the company and Deloitte as liquidators of Abraaj Investment Management Ltd.
Abraaj said that the latest restructuring agreement has received in-principle regulatory approval and is expected to close upon approval from the Cayman Islands court and other customary consents.
On Thursday, the Dubai Financial Services Authority (DFSA), which is the regulator of the Dubai International Financial Center (DIFC), said it would discuss “various matters” with the liquidators and “will continue to work toward safeguarding the interests of investors.”
The DFSA is involved because Abraaj has an entity regulated in DIFC.
Abraaj Group agreed to sell its Latin America, Sub-Saharan Africa, North Africa and Turkey Funds management business to US investment management firm Colony Capital Inc, the companies said on Thursday.
The sale agreement comes after months of turmoil at Abraaj in the wake of its dispute with four of its investors, including the Bill & Melinda Gates Foundation and International Finance Corp. (IFC), over the use of their money in a $1 billion health care fund. The group has denied it misused the funds.
The sale is part of a provisional liquidation and restructuring as set out in a court order. Financial terms of the deal were not disclosed.
Colony Capital has also agreed to oversee, on an interim basis, other Abraaj group funds that are not being acquired so that the group and all its stakeholders have a “comprehensive global solution in place,” the companies said.
The other group funds include the $1 billion health care fund, and some legacy funds of the private equity group.
Sources told Reuters earlier that US buyout firm TPG was in talks with investors in Abraaj’s health care fund to take over management of the assets of the $1 billion fund.
The K-Electric asset, which is being sold in Pakistan and is owned by Abraaj Holdings, is also not part of the transaction.
Colony’s deal comes after other investors such as Cerberus Capital Management had also made offers for the Abraaj business before it filed for provisional liquidation in the Cayman Islands.
A unit of Abu Dhabi Financial Group earlier this week made a conditional offer to buy Abraaj’s management interest in all of its limited partnerships for $50 million, according to a document seen by Reuters.
Since Abraaj’s row with some investors became public early this year, it split its investment management business and holding company, while its founder Arif Naqvi stepped aside from the day-to-day running of its private equity fund unit and the firm halted its investment activities.
Tom Barrack, executive chairman of Colony Capital, said that he hoped that the transaction would enable the process of rebuilding on all sides and also bring an end to the speculation that has swirled around Abraaj over the past months.