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Sun 26 Jun 2005 04:00 AM

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Dubai creates US$5 billion Euro-portfolio

Dubai Investment Group (DIG), which is part of Dubai Holding, is set to create a US$5 billion securities and real estate portfolio in Europe.

Dubai Investment Group (DIG), which is part of Dubai Holding, is set to create a US$5 billion securities and real estate portfolio in Europe.

DIG’s portfolio is likely to focus on the real estate, hospitality, finance and industrial sectors — with the UK’s real estate market expected to be a prime investment target. Created five years ago, DIG’s role is to spread the risk of the Al Maktoum family’s investments.

“They [Dubai Holding] are trying to diversify their cash outside of Dubai. This is a good move from them because I think this place [Dubai] is going to fall so they’re looking outside,” Joe Kawkabani, senior analyst, Shuaa Capital, told Arabian Business. “I also think that this will be followed by other moves in other countries,” he added.

Earlier this year DIG, formerly known as The Investment Office, acquired a US$1 billion multi-family portfolio, comprising more than 21,000 apartments located throughout the United States. However, the group’s next foray into the property market is expected to take place in Britian.

“The UK real estate market is not really an encouraging market at the moment, but it is interesting and has much less of a risk factor than the Dubai real estate market because it is more developed,” explained Kawkabani. “But is it the right time to invest in the UK real estate market? I would say ‘no’, but perhaps they (DIG) have their eye on some really good deals,” he added.

DIG has three arms, a stock and bond portfolio, a fund of funds, which takes positions in hedge funds and other managed investments and real estate. The purpose of DIG is not only to build a safe portfolio of index-tracking stocks and shares, but also to expand globally by taking calculated risks.

“Dubai government’s strategy is to make Dubai Holding a global company and Europe is the first step of many future steps in that strategy,” said Kawkabani. “I think next they will enter the US and then look at other emerging markets,” he added.

Unlike Abu Dhabi and Kuwait, Dubai has little oil. The emirate’s hydrocarbon reserves are rapidly dwindling and represent less than 7% of Dubai’s economy. This is why Soud Ba’alawy, CEO, DIG is leading the group’s investments elsewhere.

“We are entrepreneurs and we take calculated risks,” said Ba’alawy. “We are very different to the Kuwait Investment Fund or the Abu Dhabi Investment Authority, which are more like pension funds,” he added.

In January Dubai Holding’s private equity vehicle, Dubai International Capital (DIC) paid US$1 billion for a 2% shareholding in DaimlerChrysler. Two months later it purchased the Tussauds Group, the waxworks and theme park business.

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