Gulf institutions target real estate sector

Investcorp and Gulf Finance House have introduced real estate investment funds focused on major international centres.

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By  David Ingham Published  June 2, 2004

Investcorp and Gulf Finance House are tapping into continued demand for quality real estate in popular urban and residential centres. Bahrain-based Investcorp has created a US-focused fund called Office Properties III. The product allows investors to make money from the rental income from buildings in three business and commercial centers in the USA. The portfolio includes nine office buildings and two retail facilities in three locations: the Broward Financial Center in Fort Lauderdale, Florida; Westport Plaza in St Louis, Missouri; and the Broadway Portfolio in the New York Metropolitan area. Collectively, the properties are valued at $273.7 million and their combined occupancy rate is approximately 90%. Investcorp will take care of the leasing of vacant space, the renewing of existing tenancies and the reduction of operating costs. It will also oversee the sale or development of excess available land. Investor returns will come primarily from the cash generated by rental income, with an opportunity to benefit in the case of outright sales of the buildings in the portfolio. Gulf Finance House's (GFH's) Al Andalus House fund will focus on investments in Spain’s residential real estate market. The fund is capitalised at $50 million and the minimum initial investment is US $100,000. The fund is focusing on the Western Costa del Sol, a region where many foreigners buy second homes. GFH is targeting a return on investment of more than 20% per annum over the two year cycle of the fund. Analysts estimate that up to 1.7 million European families will choose Spain as their second home in the next five years, and half of that number is expected to invest in the Costa del Sol area. The strip runs 100 kilometres from Malaga to the provincial border of Cadiz, and includes the resort town of Marbella.

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