MIDDLE EAST NEWS: Middle Eastern retreat

International investor apathy towards Middle Eastern real estate was further evidenced last month when plans 
for a real estate investment fund by Abu Dhabi state-owned investment manager, Invest AD, were shelved.

Invest AD, formerly the Abu Dhabi Investment Company, was slated to raise a fund of up to $500 million but chief executive Nazem al Kudsi told Abu Dhabi newspaper, The National, the fund would be put on ice in line with a lack of investor support. It coincides with a number of other business lines to be closed by Invest AD, including an infrastructure fund and its investment banking arm.

The reversal of the decision for a real estate fund comes a year after Invest AD’s then-newly appointed head of private equity Samir Assaad told Reuters there was a “window of opportunity” for real estate investments amid declining values.

Michael Atwell, head of Middle East operations at property services firm Cushman & Wakefield suggested one reason why international investors were not keen on the region was due to a lack of fund grade opportunities. “We still see demand for quality real estate, “ he said, “but that is the real problem.”

“Trying to find a quality building in a quality location with quality construction and quality tenants with a secure stable income – that is difficult. There is not much investment opportunity in Dubai for a fund owing to the strata nature of ownership, and in Abu Dhabi, you have developers like Aldar, Mubadala and Sorouh, but I’m not sure they are looking to sell or even part-sell.” 

Invest AD has streamlined its focus towards private equity and listed entity investing although it also has real estate fund of funds investments among other proprietary investments.