State's wealth fund could diversify to US, where property prices are falling amid fears of recession
Qatar Investment Authority, the Gulf state’s sovereign wealth fund, could look at investing in US-based real estate as it looks to diversify its investment portfolio, analysts have said.
The wealth fund, which has so far favoured UK property, may look to the US where real estate prices have continued to fall amid fears of a second recession.
“You can expect more [investment] anywhere and especially in the US where there are clear signs that the Qataris are looking to diversify their real estate holding. Their investments in the US are deemed to be underweight,” said Fadi Moussalli, regional director of the International Capital Group at real estate services firm Jones Lang LaSalle.
Qatar, the world’s largest exporter of liquefied natural gas, has gained global attention with its high profile purchases, particularly in London.
Last month Qatar Diar acquired London’s Olympic Village for £557m ($903.5m) with the UK real estate investment firm Delancey.
The purchase was part of the Gulf state’s expanding London property holdings. It is currently a majority shareholder in Canary Wharf and has investments in the US embassy site in Grosvenor Square, the Chelsea Barracks redevelopment project, and the Shard skyscraper, which will be Europe's tallest building when it’s completed in 2012.
Investments made by the Gulf state, which has the world’s highest per capita income, estimated at $90,149, have been welcomed by the UK, said Rachel Ziemba, a senior analyst at Roubini Global Economics.
“There are strong personal ties but I think more significantly the UK is a place that is open for investment. It has welcomed Qatari investment compared to some of the other countries in Europe where they’ve been at least rhetorical concerns,” she said.
“In the last year we’ve seen a situation where the pound has depreciated and some UK acquisitions might have seemed more affordable as a result,” she added.
Qatar’s investments could be seen as “overweight” in the UK, said Ziemba, adding that US assets could be their next target. “I think they have been looking towards the American real estate market. I know they haven’t really made acquisitions yet but my understanding is that they have long thought of it as a possibility” she said.
US residential real estate prices declined the most in 19 months, according to the S&P/Case-Shiller index of home values. Prices fell 4.6 percent from June 2010, the biggest 12-month decrease since November 2009, according to the median forecast of 31 economists surveyed by Bloomberg.