|
 There
can be few bolder statements of the UAE's global
reach than it snapping up iconic buildings in
the heart of New York City.
Earlier this month, the spectacular purchase of
the towering Chrysler Building by Abu Dhabi
Investment Council (Adic) made headlines around
the world and further raised the profile of the
Emirates.
But the acquisition is simply the latest of many
by the UAE in the Big Apple – all of which,
experts say, are shrewd investments.
Importantly, they also signify the
diversification of a traditionally oil-dependent
economy into established real estate markets.
"The UAE has an appetite for these markets and
at the moment circumstances are in its favour,"
said Eamon Alashkar, head of corporate
investment at real estate experts Colliers
International, Dubai. "It gives companies a
foothold in these Western real estate markets
and gets them recognised, and other investors
can then follow suit.
"Properties such as the Chrysler Building are
trophy buys but they are also core real estate
opportunities that will also interest
investors."
The Chrysler Building deal was a good piece of
business, according to Isam Salah, head of the
Islamic finance practice at King and Spalding, a
New York law firm that specialises in
investments in the Middle East.
"This is a good time to invest in property in
America and Abu Dhabi probably got a favourable
deal," he said. "The Chrysler Building is
much-loved by all New Yorkers and I'm sure Abu
Dhabi will maintain its appeal. I don't know
what the plans are but Adic has bought a
striking feature of the New York skyline and a
prominent address.
"This is not the first buy of its kind for the
UAE so people are not suspicious about the
purchase as they have seen other successes in
the city."
Indeed, buying landmark properties in New York
is something the UAE is becoming expert at.
Adic's 75 per cent stake in the Chrysler
Building was bought for $800 million (Dh2.9
billion).
Yet, the Abu Dhabi Government's investment arm
is following an example of Dubai Investment
Group and Istithmar which have also invested in
real estate in America's financial capital.
Dubai Government-owned holding company Istithmar
got the ball rolling in April 2005 when it
bought a 99-year lease on 450 Lexington Avenue,
a 32-storey office tower built over the
eight-storey Grand Central Post Office, for
$600m.
In September 2005, Dubai Investment Group paid
$440m for Essex House – now named Jumeirah Essex
House after the Dubai hospitality firm was
brought in to spruce up the luxury hotel
overlooking Central Park.
Two months later, Istithmar purchased 230 Park
Avenue – which is better known as the Helmsley
Building – for $705m.
The following year, 2006, was the busiest to
date: In June, Istithmar bought 280 Park Avenue,
an office property spread across 1.2 million sq
ft – whose tenants include Deutsche Bank, the
National Football League and financial services
firm AG Edwards – for $1.2bn.
That same month, the company completed a $300m
deal for the former Knickerbocker Hotel at 1466
Broadway. And in October that year Istithmar
acquired the W Hotel Union Square in Manhattan
for $285m.
In 2007, Istithmar acquired the Mandarin
Oriental Hotel. Nakheel subsequently sold 230
and 280 Park Avenue – making a profit of $595m.
The company offloaded number 280 to Broadway
Properties in November 2007 for $1.35bn and
number 230 to a group including a fund managed
by Goldman Sachs Group for $1.15bn last
December.
Joe Sita, CEO of Nakheel Hotels, said: "We took
the opportunity to realise some significant
value by selling the Helmsley Building and 280
Park Avenue just before the credit crunch hit.
"There were a number of assets that Istithmar
Hotels owned that came under Nakheel Hotels when
Dubai World decided to consolidate its hotel
business to create a fully integrated hotel
investment company – Nakheel Hotels – in 2007.
"The ownership of the Mandarin Oriental Hotel
and W Hotel reflects Nakheel Hotels' investment
strategy for the hospitality sector in the US
market of targeting prized assets and its
strategy of investing in luxury hotels in key
gateway cities around the world. New York is a
gateway city and Nakheel Hotels believes in the
growth of the hotel sector in New York."
Nakheel, however, refused to comment on the
Knickerbocker Hotel investment.
Alashkar, of Colliers International, said
acquiring trophy overseas properties was a
shrewd business move.
"It redeploys the liquidity of a company – what
they are doing is diversifying into established
markets."
The numbers
75%: The stake bought by the Abu Dhabi
Investment Council in New York's Chrysler
Building
$800m: The amount paid by Adic to buy the stake
in Chrysler Building
$595m: The profit made by Nakheel Hotels by
selling 230 and 280 Park Avenue
$705m: The amount paid by Istithmar to purchase
280 Park Avenue
$440m: Was the amount Dubai Investment Group
paid for acquiring Essex House – now named
Jumeirah Essex House |
