x Abu Dhabi, UAESaturday 20 January 2018

Qatari Diar's big entry into US

Qatari Diar is financing a $700 million project in Washington DC, the Qatar sovereign wealth fund's first property investment in the US.

The project financed by Qatari Diar  is billed as the largest downtown development under construction in the US.
The project financed by Qatari Diar is billed as the largest downtown development under construction in the US.

The property arm of Qatar's sovereign wealth fund, best known for developing projects in London, is moving into the US.

Qatari Diar is financing the US$700 million (Dh2.57 billion) construction of CityCenterDC in Washington - its first foray into the US market. The 4-hectare project, which broke ground on Monday, is billed as the largest downtown development under construction in America. Qatar is "in the process of looking to gain more exposure to American real estate", said Fadi Moussalli, the Mena regional director of Jones Lang LaSalle's international capital group. "There will be more to come."

Qatar property funds have been focused on London in recent years, including funding the development of the Shard, which is designed to become the city's tallest building. Various funds connected to the Qatar government are also behind the redevelopment of London's Chelsea Barracks and the One Hyde Park luxury flats.

Now Qatar is looking to diversify, Mr Moussalli said.

"They are relatively overexposed to the UK," he said. "It doesn't mean they won't do more in the UK, but they need to balance the portfolio."

After a sharp downturn, US property is starting to attract more attention from international investors. The US is "a recovery play", Mr Moussalli said.

Foreign investment in US commercial property more than doubled last year, rising to $9.7bn from $4.1bn in 2009, according to Real Capital Analytics, which tracks the market.

But foreign investment is still well off the peak set in 2007, when Middle East funds helped to push foreign investment in US property to a record $39.8bn.

In a survey of commercial property investors released in January by the US Association of Foreign Investors in Real Estate, 60 per cent of the respondents said the US offered the best opportunity among global markets for capital appreciation this year.

New York and Washington were chosen as the top potential targets for investors, supplanting London, the previous year's top choice.

CityCenterDC will cover four-and-a-half city blocks. The first phase of the project, which was designed by Foster + Partners, includes 17,187 square metres of retail space, 674 residential units and 48,309 sq metres of office space. The second phase will include a hotel and an additional 10,219 sq metres of retail space.

Qatari Diar, which is a subsidiary of the Qatar Investment Authority, is serving as the anchor investor in the new TFI US Real Estate Fund, which will provide 100 per cent of the equity financing for the Washington project. The fund was set up by the Barwa Bank subsidiary The First Investor, which will also invest in the fund, Barwa said.

Top Qatari officials, including the prime minister, are in New York this week to participate in an investment forum focused on increasing investment links between the US and Qatar.