Dubai's $500m fund, set up two years ago to help inject capital into the emirate's stagnant real estate market, is soon set to be activated. The CEO of ICD-Brookfield Management, Douglas Kirkman, shares his outlook on the market in 2013
As a CEO you often have to balance the demands of high-profile bosses with the differing viewpoints of various stakeholders. For experienced real estate executive Douglas Kirkman this juggling match is a particularly global and high profile one.
Previously senior vice president of the Brookfield Property Group, Kirkman was appointed chief executive of ICD-Brookfield Management Limited in February and looks after the management for the ICD-Brookfield Dubai Real Estate Fund.
The ICD acronym in this case refers to the Investment Corporation of Dubai, the investment arm of the government of Dubai. Its chairman is Dubai’s ruler, HH Sheikh Mohammed Bin Rashid Al Maktoum, and it holds stakes in more than 30 companies, including Emaar Properties, developer of the world’s largest mall and tallest building, Emirates Airline, Borse Dubai, Emirates National Oil Company (ENOC) and Emirates NBD, the UAE’s largest bank by assets.
Sitting on the other side of the dash mark is Brookfield Asset Management, the Canadian asset management company which manages a global portfolio valued at over $180bn, including exclusive stretches of Manhattan and London’s Canary Wharf.
The union of these two global conglomerates under one umbrella occurred in October 2011 when the ICD-Brookfield Dubai Real Estate Fund was set up to help boost the emirate’s battered real estate market.
At the time, Dubai was still reeling from the impact of the real estate crash, when the global financial crisis pierced the overinflated Dubai property bubble and sent prices tumbling by about 60 percent from their peak. That resulted in nearly half the emirate’s development plans being mothballed or sent to the shredder.
Kirkman was brought onboard to help mastermind part of this recovery, but a lot has already changed in the timeframe since the fund’s existence was announced. “Psychologically Dubai was in a different place [in 2011] and perhaps ICD and Brookfield thought there may be distressed situations in the market where Brookfield may be able to bring its real estate acumen and knowledge of capital structures and its real estate platforms to help work through some of those issues,” Kirkman says.
“The way the crisis has played out here I’d say a lot of those stalled projects either have investors who aren’t that excited about being deluded or banks who are probably more interested in extending an existing loan in the hope that when that extended loan becomes due the world will be a better place and magically they have been saved.”
He believes struggling developers and investors need to be “dealing with the pain today… or, in the case of the banks, take a haircut on their loan.” Unfortunately, he believes “that is not the way projects are being dealt with,” and “they tend to be mothballed”.
Over the last few months more than a dozen multi-million and multi-billion dollar mega project launches — from gigantic ferris wheels and theme parks to epic residential projects — have been clamouring for headlines. But the ICD Brookfield partnership will focus more on the projects that got left behind by the crisis.
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