I just returned from a trip to Los Angeles last week in which I met with officials from the development company, Related Companies, which entered into an equity partnership with a Dubai investment firm.
Istithmar World, part of Dubai World, has put up US $100 million (AED367 million) to gain a minority stake in a redevelopment project that promises to revitalise downtown Los Angeles with a 16-acre park nestled between the city centre's public buildings, along with a five-star hotel and numerous retail and entertainment outlets.
There will be a full report in the coming weeks in Construction Week about the relationship between Related and Istithmar and what it means to cities like Los Angeles, which are desperate for off-shore investments to make ambitious projects a reality.
Why should we care about the doings of a Dubai company in California? The fact is that UAE companies are part of a decades-old pattern of foreign investors seeking long-term commitments on US projects. They seek investments that will return significant profits that at the end of the day will benefit homegrown endeavours. In many cases American development companies can't pursue ambitious development plans without UAE money.
Curiously, when the Japanese aggressively invested in US real estate in the 1980s and the Chinese in the '90s, there was a lot of hand-wringing among politicians and pundits that the United States was losing its identity (and its land and iconic buildings) to Asian investors. By contrast, criticism of UAE investments has been largely muted.
There has been barely a ripple of complaint when the Manchester City football club was bought by the Abu Dhabi United Group for Development and Investment and the Abu Dhabi Investment Council purchased 75% of the Chrysler Building for $800 million.
The same goes for Los Angeles. County and city officials there have expressed eagerness to approve Istithmar's participation in their multi-billion-dollar development project. The reason is simple. Without Istithmar's help there may very well be no revitalised downtown.
Middle East investors' foray into investing in US development projects also demonstrates the disconnect between what Americans see and hear on Fox News and CNN about the perceived threat of the infusion of Middle East cash in American real estate and the fact that Americans instinctively recognise that if they want a park in an urban center, local developers will need outside help.
It is even more vital in today's economic climate that the UAE and other Middle East investment companies become active participants in developing real estate abroad. It not only strengthens local economies in American cities by creating housing and commercial development but also boosts economic interests here.
Rob Wagner is the editor of Construction Week.For all the latest construction news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.
Subscribe to Arabian Business' newsletter to receive the latest breaking news and business stories in Dubai,the UAE and the GCC straight to your inbox.