Saudi investment fund PIF ‘has $300bn in assets and counting’

Saudi Arabia’s Vision 2030 reform plan is expected to transform the country’s key wealth fund into one of the world’s largest sovereign investment vehicles. (Shutterstock)
Updated 10 June 2019

Saudi investment fund PIF ‘has $300bn in assets and counting’

  • Boost in Kingdom’s wealth fund ‘will improve country’s international investment position,’ study shows

LONDON: Saudi Arabia’s key wealth fund has about $300 billion in assets and its growing size is set to “improve the country’s international investment position,” a new report has found.
Roughly a quarter of the Kingdom’s Public Investment Fund (PIF) holdings are overseas, with investments in companies like electric car maker Tesla and SoftBank’s Vision Fund, according to the Institute of International Finance (IIF) analysis. 
A raft of privatization deals and the planned $69 billion sale of a controlling stake in petrochemicals giant Saudi Basic Industries (SABIC) to Saudi Aramco is set to further boost the fund’s coffers, according to the IIF.
That means it is likely PIF will hit a target of $400 billion in assets by 2020, something the fund’s representatives have previously suggested is on track. 
“The expected further increase in the PIF’s assets abroad will improve the country’s international investment position,” the IIF report said.
“We now estimate PIF’s assets at about $300 billion, of which one-fourth are invested abroad, including in … Blackstone’s infrastructure fund, Egypt’s investment fund, Russia’s investment fund, and Uber. Proceeds from privatization (a target of about
$200 billion) and the eventual 5 percent sale of Aramco (a target of $100 billion) will further boost the PIF’s assets.”
However, the IIF noted that the privatization drive has been delayed due to legal impediments, concerns about implications for the labor market, and — in the case of the planned sale of a 5 percent stake in Saudi Aramco — regulatory procedures that need to be addressed.
The Vision 2030 reform plan envisions the transformation of the PIF into one of the world’s largest sovereign investment vehicles, managing $2 trillion by 2030. 
The Sovereign Wealth Fund Institute estimates PIF’s current assets at $320 billion, higher than the IIF’s assessment, making the Saudi entity the 10th largest fund of its type globally. Representatives of PIF did not immediately respond to a request for comment. 
The IIF report also found that Saudi Arabia’s holdings of US government bonds climbed to a peak of $170 billion in March 2019. The Kingdom has also “repositioned” its assets from euro and UK pounds to US dollars, the institute said.
“The increase in the Saudi appetite for US bonds coincided with relatively higher US yields and unfavorable investment sentiment in (emerging markets) and the euro zone,” the report noted.


Dubai rents may be bottoming out as ‘green shoots’ appear

Updated 20 January 2020

Dubai rents may be bottoming out as ‘green shoots’ appear

  • An estimated 45,000 homes were completed in Dubai in 2019 according to Chesterton estimates

LONDON: Confidence may be returning to Dubai property despite a bloated market for off-plan homes, according to a report from Chestertons, the real estate broker.

Although apartment and villa sales prices were down 2 percent and 3 percent respectively in the fourth quarter of 2019 compared to the previous quarter, rental rates are stabilizing.

But supply issues continue to represent the biggest challenge facing the market, with 45,000 new units completed in 2019 and that expected to double this year.

“The Dubai residential market in Q4 2019 is alluding to a more positive outlook for 2020 thanks to the slowdown of sales price declines and the leveling of rental rates,” said Chris Hobden, of Chestertons MENA. “This does, however, have to be tempered by the volume of new units scheduled for delivery in 2020, which makes the short-term recovery of prices in the emirate unlikely.”

In the rental market, no movement was witnessed in the fourth quarter with the market supported by a draft law which would fix rental rates for three years upon the signing of a contract. 

“To ensure high occupancy in 2020, landlords will have to be realistic in the face of tough market conditions. The incentives previously offered to tenants, such as rent-free periods, multiple cheques and short-term leases, will continue, with an increase in tenant demand for monthly direct debit payments also likely” added Hobden.