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Abu Dhabi, UAETuesday 11 December 2018

Exclusive: GFH plans to develop ‘one of the key land banks in the region’

Bahraini investment house in talks with two interested parties to develop more than 25 million square metres of land

CEO Hisham Ahmed Al Rayes says the investment bank is drawing up a development strategy for a 25 million square metre land bank across the GCC, India and Africa that it acquired in August, its chief executive said. Phil Weymouth for The National
CEO Hisham Ahmed Al Rayes says the investment bank is drawing up a development strategy for a 25 million square metre land bank across the GCC, India and Africa that it acquired in August, its chief executive said. Phil Weymouth for The National

GFH Financial Group, the Bahraini Sharia-compliant investment house, is drawing up a development strategy for a 25 million square metre land bank with a US$1.2 billion value, across the GCC, India and Africa that it acquired in August, its chief executive said.

“We are currently negotiating with several parties and hope that over the coming 12 to 18 months we will be able to decide the direction we wish to take and choose the right partner for it within this period,” Hisham Al Rayes, chief executive of GFH said.

“This is one of the key land banks in the region, and we are exploring plans to list it, or make strategic partnerships with international parties to have access to those lands.”

An appropriate partner, or partners, would be a “real estate developer that needs attractive valuations on land banks to be able to gain strong entry into key markets,” Mr Al Rayes said.

The talks at present are with international companies, he added, but GCC developers with plans to expand outside the region may also be interested. “We are looking to create partnerships and maybe exit at a certain point in time, which we expect would achieve huge returns for our shareholders in the medium term.”

The land bank is the result of three funds GFH managed before the 2008 financial crash that failed to return 100 per cent of profits to their clients.

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“Those three funds were strategic land banks that had huge growth potential pre-2008, but [experienced] a shift in growth prospects due to the economic crisis,” Mr Al Rayes explained.

“So, we took the strategic decision for GFH to acquire the land and aggregate it together to create one of the largest land banks in the region.”

He cited Mohamed Alabbar, the founder of UAE-based developer Emaar Properties, which last month listed its subsidiary Emaar Development on the Dubai index, as having said one of the key advantages a developer can have is a sizeable land bank.

“So we took those scattered land banks and aggregated them under one umbrella to create huge value for real estate companies,” Mr Al Rayes said.

Firming up a strategy for the land bank is likely to take at least a year because of the challenge in finding one partner interested in developing across all the countries it covers.

“It’s a huge portfolio and we may end up breaking it up,” he said.

“Real estate developers are mainly localised. It’s rare that you find a local developer with operations worldwide, because it has to do with local knowledge and so on.”

GFH registered a net profit of $25.09m for the third quarter of 2017 compared to a loss of $7.58m for the same period in 2016, and expects a similar performance for the final quarter and into 2018, the chief executive said.

The investment bank, whose shares are listed in Bahrain, Kuwait and Dubai, is aiming for approval from Saudi Arabia in the first half of next year to cross-list on the Tadawul stock exchange.

“Saudi Arabia is starting with pilot companies cross-listing as it becomes more sophisticated and competitive,” said Mr Al Rayes.

“We satisfy the criteria since we are already in three markets and are familiar with such arrangements. However, there is huge competition for this pilot and I hope we manage to be one of the chosen companies.”