Bloomberg News

Brookfield, Dubai Government Plan $1 Billion Property Fund

October 26, 2011

(Updates with Brookfield CEO comment in third paragraph.)

Oct. 26 (Bloomberg) -- Brookfield Asset Management Inc. and a Dubai government investment arm will start a $1 billion fund to buy real estate assets in the emirate after prices dropped by more than half since 2008.

The eight-to-10-year fund will be started with $100 million each from Toronto-based Brookfield and the Investment Corporation of Dubai, the companies said today in a statement. It will target a “wide class of assets in both freehold and non-freehold areas.” Local, regional and international investors will also be invited to join the fund that will be capped at $1 billion.

“We see excellent opportunity in real estate in Dubai,” Brookfield Chief Executive Officer Bruce Flatt said in the statement. “We are witnessing a number of encouraging signs, in particular the arrival of long-term capital to the sector, which traditionally marks the early signs of recovery in real estate.”

Dubai’s property market went from being one of the world’s best performing to the worst following the global credit crisis three years ago, with home prices slumping 64 percent since the mid-2008 peak, according to Deutsche Bank AG estimates. In Abu Dhabi, capital of the United Arab Emirates, home prices slid 55 percent, Rasmala Investment Holdings estimated.

“We see this agreement as another big step in our next phase of growth,” Sheikh Ahmed bin Saeed Al Maktoum, chairman of Dubai government’s Supreme Fiscal Committee and a member of the investment corporation’s board, said in the statement. The step “affirms Dubai’s attractiveness as a premier investment destination in this region,” he said.

‘Positive Sign’

The fund demonstrates “the government’s need to take an initiative to move out of this crisis facing the real estate or equity markets,” said Mohammed Ali Yasin, chief investment officer for CAPM Investment PJSC. “It sends a very positive sign. I think the private sector will also be interested to be part of this.”

Brookfield, an owner of buildings, ports and power plants with about $150 billion of assets under management, will move senior executives to Dubai from other offices to manage the fund with local specialists, it said.

This is “clearly a step in the right direction in terms of bringing back confidence to the real estate market,” said Viswanathan Shankar, Standard Chartered Plc’s chief executive officer for the Middle East, Africa, Europe and the Americas. “It’s something that needs to be done to bring more liquidity to the sector.”

“ICD is looking forward to participating in the recovery of the Dubai real estate market,” Mohammed Ibrahim Al Shaibani, executive director and chief executive of state corporation, said in the statement.

Investment Corporation of Dubai, one of the emirate’s three main state holding companies, has stakes in more than 30 companies including Emirates, the world’s biggest airline by international traffic, Emirates NBD PJSC and Emaar Properties PJSC, the developer of the world’s tallest tower in Dubai.

--With assistance from Vivian Salama in Dubai. Editors: Ross Larsen, Jeff St. Onge.

To contact the reporter on this story: Tamara Walid in Abu Dhabi at twalid@bloomberg.net Stefania Bianchi in Dubai at sbianchi10@bloomberg.net

To contact the editor responsible for this story: Maher Chmaytelli at mchmaytelli@bloomberg.net


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