Al-Khabeer includes London amid $400m investment drive

The Jeddah-based boutique investment and asset management firm has included a London development fund on its slate of new investment vehicles for 2012. It would be the first time Al-Khabeer has invested outside of the Gulf region.

Al-Khabeer Capital, the Jeddah-based boutique investment and asset management firm, is plotting an investment programme aimed at putting $400 million to work over the next two years.
The firm, one of two companies under the Al-Khabeer brand, is raising three funds targeting a total of SAR525 million (€107.86 million; $140 million), including, for the first time, a fund targeting investments outside of the Middle East. These are expected to form part of its investment drive.

Specifically, the firm plans to raise SAR125 million for its London Prime Location Residential Development Fund, which would aim to generate returns of 20 percent IRR. The other two funds plotted for launch are a SAR150 million residential development fund and a SAR250 million industrial property development fund for “build to suit” situations. Both of those are for investments in Saudi Arabia and through which the firm is targeting IRRs of 15 percent and 8 percent respectively.

Sherif Selim, director of asset management and head of real estate at Al-Khabeer Capital, who leads a team of seven real estate professionals, told PERE how the London development fund might lead to further investment vehicles targeting further international markets. He said: “We are considering more mature markets such as the US and Europe and we are in the process of identifying which markets we will tackle next and how.”

Al-Khabeer typically invests capital on behalf of Saudi high-net-worth individuals, family offices and institutions as well as institutions from elsewhere in the Gulf region for which it offers Shariah-compliant vehicles. Historically the firm has also invested between 5 percent and 20 percent of the capital in its funds.

The firm is now fully invested on its previous Saudi-Arabia development funds, Al-Khabeer Land Development Fund I and Al-Khabeer Land Development Fund II, which collected SAR290 million and SAR774 million respectively. Each was a single-asset fund.

While Al-Khabeer is now extending its investing horizons, Selim said the firm remained bullish about Saudi Arabian real estate. He said: “We believe that Saudi is and will remain the market with the most potential amongst the other GCC countries for many reasons: Saudi Arabia is the largest country in the GCC with strong business fundamentals and robust economic growth forecasts, which all combined make it a very attractive market place to investors.”

According to the latest research by global property services firm CBRE, Saudi Arabia produced GDP growth in 2011 of 6.8 percent, the fastest growing rate since 2003. The firm noted that 2011 also saw Saudi Arabia’s government increase its public expenditure, including in areas such as housing and infrastructure, to a record $214 billion, 39 percent more than originally planned. This year alone it has committed to investing $2.9 billion more purely on the country’s roads network, for example.