The Middle East’s super-rich community grew by 100 in the last year to include 4,595 individuals with a combined wealth of $710bn.
While the number of ultra high net worth (UHNW) individuals with a fortune over $30m increased, their total wealth decreased 1.3 percent to $710bn, according to the ‘World Ultra Wealth Report 2012-2013’ compiled by Singapore-based Wealth X consultancy firm.
Qatar, which is gearing up to host the FIFA World Cup in 2022 and is renowned for its massive gas and oil reserves, is home to twelve billionaires, each worth an average of $1.4bn. However, while the number of UHNW individuals in the Gulf state grew by 3.4 percent, their total balance sheet also decreased by 2.2 percent to $45bn.
“The gloom in Europe may prove to be the drag on economic expansion in Africa and the Middle East through the reduced demand for oil and an increase in risk aversion amongst investors,” the report warns, but Steve Troop, CEO of Barwa Bank, is more upbeat.
“Anyone who has managed to preserve capital has done very well… 2.2 percent poorer? To come out with 97.8 percent is [still] very well,” says Troop.
The Cambridge University graduate and native of Yorkshire may be the head of Qatar’s fastest-growing Sharia-compliant lender but he has an interesting take on why the country’s super-rich community is seeing their wealth shrink.
“We think corporate wealth management is not done terribly well in the Middle East,” he says candidly. “All banks start out with the best of intentions but it ends up as product push… It gets simplified along the way and people have agendas and targets.
“There is a much more sophisticated way. Very simply, it is about getting close to your customer and learning who they are and thinking about what they need next… Islamic wealth management and people who want Islamic banking have wealth management needs. This is an area in which we feel we can do a lot more,” he adds.
In the short time since it was established, Barwa Bank has attracted business from some pretty impressive names. It was a joint lead lender on managing the sukuks for the Dubai government, the State of Qatar and the recent round of funding for Emaar Properties, the Dubai-based developer of Burj Khalifa — the world’s tallest building.
With such a portfolio of names behind it, Troop says he has some typically big Qatar-style ambitions. “We will go regional and international in time. We will do so as and when we identify the right assets and the right price and when we are in a position to manage an overseas operation.
“Managing something in a different time zone can exert a considerable strain on management. You need to have a reputable business… It is the height of arrogance to just pitch up… Finding the right assets is important,” Troop says.
In 2009, Barwa Bank acquired 100 percent of The First Investor (TFI), the largest closed shareholding Qatari investment banking firm in Qatar.
As part of the acquisition of TFI, Barwa Bank is already looking global and Brazil is one of the locations on its radar in terms of real estate investment funds.
“We have a Brazil property fund going,” Troop says. “There is traditionally a strong appetite for real estate in this part of the world, coupled with a pretty acute eye for value.”
With Brazil set to host the FIFA World Cup in 2014 and Rio de Janeiro to become the first South American city to stage the Olympic Games when the torch is lit in 2016, the country has a strong economic future, he believes. “I have worked in Brazil and I believe in Brazil… It makes sense.”
The latest figures have shown Arab countries imported more than $3.6bn worth of goods from Brazil during the first half of 2012, while Arab exports to Brazil reached nearly $4bn during the same period.
Brazilian exports to Arab countries mainly consisted of sugars, meat, ores, slag, ash and cereals, while Arab exports to Brazil included mineral fuel, oil and fertilisers. According to the Arab-Brazilian Chamber of Commerce, Saudi Arabia remains the leading trade partner of Brazil in the Arab world.
The Gulf kingdom received more than $720m in imports and over $1.4bn in exports to Brazil during the first half of 2012. Access to the country improved dramatically last year when Qatar Airways announced it had signed a codeshare agreement with Brazil’s GOL Linhas Aereas Inteligentes, a deal that will open up 47 Brazilian routes for the state-backed carrier. The codeshare will allow Qatar Airways access to some of Brazil’s most important business cities such as Sao Paulo and Rio de Janeiro, the airline said. GOL is one of the biggest airlines operating in the South American country with a fleet of 108 aircraft. It operates some 860 flights daily to 61 destinations in ten countries, according to its website.
While Brazil is the latest location in Troop’s plans, Barwa Bank already has one standout global real estate project on its books: one of the largest urban rejuvenation projects in North America.
Through TFI’s US Real Estate Fund, Barwa Bank is involved in the development of CityCenterDC, a landmark, mixed-use project in downtown Washington, DC, which is widely considered one of the largest downtown developments currently under way in the United States.
TFI is managing the investment, alongside the fund’s anchor investor, Qatari Diar, and this summer international law firm Covington and Burling was announced as the development’s anchor tenant.
Founded nearly a century ago in Washington DC, Covington is a leading international law firm, with more than 800 lawyers with offices in Beijing, Brussels, London, New York, San Diego, San Francisco, Silicon Valley and Washington. The firm plans to occupy approximately 420,000 square feet and move into its new space in 2014.
CityCenterDC is a pedestrian-friendly, ten-acre mixed-use development, located in the heart of the US capital. Phases I and II of the project will contain more than 295,000 square feet of retail space situated at the base of seven buildings that encompass 520,000 square feet of office space, 458 rental apartment units, 216 condominium units, a 350-room luxury hotel and nearly an acre of open spaces.
“As Qatar’s first major real estate investment in the US, I am pleased to note that construction is progressing ahead of schedule and that the project has secured a letter of intent to lease the majority of the office space from a prestigious global law firm, further demonstrating the commercial attractiveness of this project,” says Mohammed Al Saad, vice chairman and managing director of Barwa Bank and board member of TFI.
“This clearly reflects the investment and development management expertise of the senior team at Barwa Bank… as well as that of our development partners Hines and Archstone. Between us, we are delivering a truly transformational, mixed-use landmark development in one of the world’s great capital cities,” he adds.
Construction of Phase I of the project commenced in March 2011. As of May this year, the structures associated with the two office buildings, two apartment buildings and two condominium buildings were above-grade. It is anticipated that these buildings will be “topped out” by autumn this year and will be in a position to accept initial occupants during the second half of 2013. The CityCenterDC retail component will consist of over 60 stores, restaurants and cafes. The project will feature a mix of local, national and international brands. Initial leases are being finalised and it is expected that a critical mass of tenants will be in place by the second half of 2012 with openings beginning as early as autumn next year.
Looking to the future, Troop admits Barwa Bank is “a late entrant to a very crowded market,” but he is determined to stand out.
“We have to bring something different. Given that we have a congested market, we have no intent of being a mass-market bank. Six branches is a small network and we add to that selectively, but it won’t be a big roll out.”
Despite his modesty, handling one of the largest projects on the other side of the world, while qualifying to manage some of the biggest sukuks in the region gives a pretty good idea of the direction in which the lender is going.
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