Commercial Magazine

International Investments: United Arab Emirates

By Neil Pierson

When it comes to the global economy, think of the United Arab Emirates as a nation that punches well above its weight. The Middle Eastern country with a population approaching 10 million covers an area slightly smaller than the state of Maine, but it ranks as one of the world’s wealthiest nations on a per capita basis.

At the start of this year, the UAE slotted in at No. 7 on this list with a per capita income of $78,255 — a higher rate than Norway and the United States, according to Global Finance Magazine. An economy centered on farming, fishing and pearl trading was remade after the discovery of oil there in the 1950s. Today it has two world-renowned cities in Dubai (3 million residents) and the capital of Abu Dhabi (1.6 million residents). For more than a decade, Dubai has been home to the world’s tallest building, the Burj Khalifa, a 163-story tower that stands more than 2,700 feet high.

The UAE also has emerged as a notable player in commercial real estate investments. As recently as 2020, it barely cracked the top 20 of the largest cross-border funding sources into the U.S., according to MSCI Real Assets. But for the year ending in third-quarter 2022, the UAE ranked No. 13 on this list. Although its $1.1 billion investment total represented less than 2% of all foreign capital placed into U.S. commercial properties during these 12 months, the UAE upped its capital-infusion level by 162% on a year-over-year basis, MSCI reported.

Gulf Islamic Investments, based in Dubai, made a splash on American soil in December 2021 when it acquired a portfolio of 11 office buildings in Richmond, Virginia, for $87 million. The seller was Brookfield Properties, a subsidiary of Canadian-based Brookfield Asset Management — one of the largest foreign investment companies in the U.S. Richmond has been a recent hot spot for cross-border activity: According to CBRE data, international investors placed $445 million into the city from January 2021 through June 2022, accounting for 38% of all investment sales during this period.

In a much larger deal that also occurred at the end of 2021, AGC Equity Partners (which is based in London and Dubai) paid $780 million for three office buildings in San Jose. The transaction represented the largest of the year in Silicon Valley, according to The Mercury News. Yahoo is leasing the space, which cost AGC a pretty penny of $1,185 per square foot at the time of purchase. Yahoo, which was allowing many of its employees to work from home, then subleased two of the buildings this past September to Chinese tech firm ByteDance (TikTok’s parent company).

Damac Properties, which recently opened a 70-story luxury apartment building in Dubai, acquired a South Florida parcel last year for its first stateside development project. The property is infamous as the former site of Champlain Towers South, the condominium tower that collapsed in June 2021 and killed 98 people. Survivors of the condo collapse will receive $33 million of Damac’s $120 million purchase price, the Miami Herald reported.

Another Dubai-based investment company, Safanad, purchased a pair of U.S. hotels in 2022. It partnered with The LCP Group on an $83 million purchase of a 196-room beachfront resort south of Tampa. CBRE brokered the deal with a $72 million loan. A few months later, Safanad acquired a Hilton-branded property near Los Angeles International Airport. The deal for the 162-room property was valued at $37.5 million, MSCI reported. ●


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