By Elsa Baxter
Emerging markets and real estate helping to diversify holdings - Credit Suisse.
Gulf Arab investors will increasingly look for opportunities outside the region, with deals in emerging markets and real estate helping to diversify holdings, an official at Credit Suisse Group AG said.
After 2001, Middle East investors began looking at their home markets, including Saudi Arabia and the UAE, “and as a result outbound investments went from about 65 percent to less than 40 percent today,” Bassam Yammine, a managing director and joint chief executive officer for the Middle East at Credit Suisse, said in an interview in Dubai. That ratio “will eventually balance out,” he said.
Investors in the region “need to diversify” and are also more interested now in some emerging markets of Asia and Latin America, where growth and wealth creation has been “robust” and investors “want to participate in that shift,” Yammine said.
Gulf Arab countries, which also include Kuwait, Qatar, Bahrain and Oman, pump more than 20 percent of the world’s crude oil and a quadrupling of oil prices in the past eight years is helping boost wealth across the region. The Middle East has more than 400,000 millionaires and their combined wealth grew 7.1 percent in 2009 to $1.5 trillion, according to a report by Cap Gemini SA and Bank of America’s Merrill Lynch unit.
The Qatar Investment Authority, the Persian Gulf country’s sovereign wealth fund, this month agreed to invest $2.8 billion in the Agricultural Bank of China Ltd.’s initial public offering. Kuwait Investment Authority, the wealth fund in neighboring Kuwait, said it would buy $800 million of stock.
The Qatar wealth fund has also been buying up properties in London to take advantage of lower prices and the pound’s weakness. Barwa Real Estate, controlled by the fund, on June 17 agreed to buy Park House, an office and retail development on London’s Oxford Street, for 250 million pounds ($370 million).
The fund also bought London’s Harrods department store last month and in 2009 became the largest investor in Songbird Estates, which owns most of the Canary Wharf office estate.
“Real estate will be one important destination” for investment, Yammine said. “People in the Middle East like real estate, they are comfortable with it, it is tangible.”
Credit Suisse has about 250 employees across the Middle East with offices in eight cities in the region and was an adviser to the Qatar Investment Authority in its purchase of Harrods. (Bloomberg)