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Brookfield partners with Qatar for Manhattan JV

As sovereign wealth funds seek diversification, Qatar writes a check for a 44 percent stake in the $8.6 billion mixed-use development.

Qatar’s sovereign wealth fund has bought a 44 percent stake in Brookfield Property Partners’ five-building Manhattan West development, the companies announced Wednesday.

Construction has started for the project, which will include a luxury residential building, hotel and office towers. Brookfield estimates that Manhattan West will be valued at $8.6 billion upon completion, the firm said in a statement Wednesday. The site is being developed in stages, with the 844-unit residential tower open in 2017 and the first office tower finished in 2019.

Qatar Investment Authority (QIA) has partnered with the real estate arm of Brookfield Asset Management on previous deals, including the acquisition of London’s Canary Wharf, the city’s second-largest financial district.

The latest deal comes as more sovereign wealth funds, which historically parked money in more conservative real estate investments such as government bonds, are seeking big US development deals. Manhattan has become particularly attractive with a strong dollar and more opportunities than London and other markets that have been perceived as overheated. QIA, the world’s ninth-biggest sovereign wealth fund, opened a New York office in September to access more deals in the country where it plans to invest $35 billion across multiple asset classes over the next five years.

Kuwait is also looking for diversification just blocks away from Brookfield’s project. The Kuwait Investment Authority, a longstanding investor in Related Companies, invested in the New York-based real estate firm’s $15 billion Hudson Yards project in 2013. Like Brookfield, Related is trying to draw tech firms and more traditional companies away from older offices to Manhattan’s underdeveloped West Side through mixed-use development.

“This joint venture is an example of our strategy to invest in high-quality real estate with strong partners,” said His Excellency Sheikh Abdulla Bin Mohammed Bin Saud Al-Thani, chief executive officer of QIA, in a statement Wednesday. “It is also a further demonstration of QIA’s long-term confidence in the US market.”