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ADIA: Oil prices won’t impact RE investments

The US real estate head of the sovereign wealth fund said it expects to continue investing at the same pace in the coming years.

Oil prices have slumped to their lowest levels since 2002, but oil-based sovereign wealth fund Abu Dhabi Investment Authority (ADIA) plans to continue investing billions in real estate.

On the contrary, Tom Arnold, the fund’s US real estate investments head, said the price of oil has not impacted ADIA’s real estate investments. He spoke with two other foreign investors at a panel Wednesday hosted by the Urban Land Institute in New York. 

Oil prices “certainly will affect the amount of new capital that comes in,” he said on the panel. But “it’s an active enough portfolio that you have to peddle pretty hard to stay in place.”

Arnold said the fund invested about $10 billion of equity in 2015 in real estate, a number he does not expect to drop in the years ahead. Last month, it bet $3 billion with PSP Investments on the US industrial sector, purchasing a 55 million square foot portfolio of industrial real estate properties across the country. ADIA is the world’s second-largest sovereign wealth fund, according to the Sovereign Wealth Fund Institute.

“ADIA was built when oil was $15 to $20 per barrel,” Arnold said, a price still lower than today’s $30.

At the Urban Land Institute forum, Arnold joined Erik Horvat, the managing director of Shanghai-based Fosun Property Holdings, and Dean Shapiro, the senior vice president of US investments for Oxford Property Group, the real estate arm of the Ontario Municipal Employees Retirement System. All the panelists expressed confidence about the US real estate market outlook.

“We fundamentally believe in real estate in key global markets, in New York particularly,” Shapiro said.