Investment Corporation of Dubai, Brookfield JV set to target stalled projects in emirate
Investment Corporation of Dubai (ICD), the emirate’s sovereign wealth fund, and Canada’s Brookfield Asset Management expect to secure the $500m in financing needed to launch a real estate fund to help recapitalise stalled or semi-complete projects in Dubai by the end of 2013.
“Right now we are dealing with the licence at the DIFC [Dubai International Financial Centre]... If you mean launch as in active marketing and legally able to do it, we will hit that point right before Ramadan,” Douglas Kirkman, CEO of ICD-Brookfield Management Limited and manager of the ICD-Brookfield Dubai Real Estate Fund, said in an interview.
“At that point we can formally launch and market [the fund]. We have our capital available. In terms of closing the fund, as in finished raising the funds... inshallah the end of the year,” he told Arabian Business.
Announced in October 2011, the fund was originally set to be capped at $1bn, but Kirkman said it was realistically more likely to be around $500m when it starts operations in 2014.
“I think [the $1bn figure] was an original press release. We are probably focusing on more like half of that. $100m from ICD and $100m from Brookfield and the rest will be raised by third-party capital from a number of partners, which is the business Brookfield is in globally,” he explained.
“The investment strategy of the fund will target opportunities currently available in the Dubai real estate sector, with a focus on a wide class of assets in both freehold and non-freehold areas,” the company stated, putting the timeline for operation of the fund at around eight to ten years.
Mohammed Ibrahim Al Shaibani, CEO of ICD, said at the 2011 launch the company was “looking forward to participating in the recovery of the Dubai real estate market”.
“This venture with Brookfield is the first 'Dubai-only' investment fund that is sponsored by a leading international investor,” he said.
ICD holds about $70bn in assets; its portfolio includes Emirates Airline plus stakes in Dubai's largest bank, Emirates NBD, developer Emaar Properties and Borse Dubai.
Brookfields, a global asset manager with interests in property and infrastructure, plans to relocate employees to Dubai to oversee the fund, alongside “qualified UAE nationals”, the statement said.
Sheikh Ahmed bin Saeed Al Maktoum, chairman of Dubai's Supreme Fiscal Committee, said the establishment of the fund was “another big step” in the Gulf emirate’s economic growth.
In terms of investing in projects, Kirkman was keen to start this process once all the legalities and licences are in place: “If launch was to invest in a building, it would be as soon as there is a good building to invest, that could be in a month or as soon as possible.”
Dubai was one of the markets hardest hit by the real estate downturn in the region, with property prices dipping by about 60 percent from their peak in 2008 and around half of projects mothballed or scrapped in the face of the global financial crisis.
However, Kirkman said Brookfield, which has 2,000 staff in Dubai through its construction arm Brookfield Multiplex, is upbeat and positive about prospects for the region.
“We are a believer in the Gulf and a believer in the MENA (Middle East and North Africa) region. As a launch pad into the rest of that area we believe this was an excellent starting point.
“We have an operation in India and we do have guys on the ground in Mumbai and I oversee India from here. We felt beyond India we are not invested in Africa or in South Asia much to speak and we believe this is a good toe-dipping exercise in an area that has the rule of law, has property rights, that has good infrastructure and we felt if Dubai was a good start point there was no better partner than the Investment Corporation of Dubai.”