A property investment fund run by Dubai's Abraaj Capital has bought an office building in Cairo in its first transaction since its launch last year.
Abraaj, the largest buyout firm in the region, did not disclose the value of the transaction made through its ASAS unit, or the returns it hopes to earn from leasing out the building. But analysts say Egypt's office market is heating up as investors - including many from the Gulf - flood in.
"Egypt is a booming market," said Ammr Donia, a consultant at Cluttons in Bahrain. "In the past three to five years it has changed dramatically from a sporadic city to something a bit more organised."
ASAS was launched last year to exploit "well-hidden opportunities" in regional property markets that had cropped up after prices dropped in the wake of the financial crisis. The fund raised more than US$100 million (Dh367.3m)from investors, according to news reports.
"ASAS has made its first investment in a fully operational grade-A office building with high-quality, multinational tenants," said Faisal Khan, an Abraaj executive. "The investment rationale is supported by an undersupply of premium office space in Cairo and by attractive economics."
Office space in Cairo has traditionally consisted mainly of converted apartment complexes, Mr Donia said. But economic development and the growing presence of multinational companies in the country has spurred demand for modern office complexes. Prices for office space have risen by between 30 per cent and 60 per cent in the past three years alone, he said.
"It became an international market all of a sudden, and a lot of companies were starting to open a presence in Cairo," he said. "And then they started thinking 'why don't we have proper office buildings'?"
In addition to taking advantage of lower property valuations in the region, ASAS says it is aiming to capitalise on underinvestment in commercial property by institutional players in the Gulf and the rest of the MENA region.
"The ASAS private equity real estate platform is a demonstration of Abraaj Capital's commitment to its holistic alternative asset management strategy, leveraging the firm's expertise in the region with the support of a dedicated real estate investment team," said Mustafa Abdel-Wadood, a managing director at Abraaj.