$1.69 billion purchase of the prime development site at Beach Road, Dubai World Group’s (DWG) investment arm, Istithmar

FRESH from its recent $1.69 billion purchase of the prime development site at Beach Road, Dubai World Group’s (DWG) investment arm, Istithmar, said that it is planning to set up a major joint venture Asian real estate operation to be based in Singapore.

The group’s chief investment officer, Yu Lai Boon, said that the joint venture would be undertaken in partnership with a Singapore-based global financial company.

DWG has recently diversified its portfolio with several high-profile investments worldwide, including stakes in European aerospace giant EADS, the Barneys New York retail chain, and the MGM Mirage entertainment company and half of its CityCenter development.

Asked if the company’s one-third stake in the Beach Road site had to do with the softening of the real estate market in the Middle East, Dr Yu said that it had been invited to participate by its joint venture (JV) partner, City Developments Ltd (CDL). Dr Yu added: ‘Asia is the most important area of focus for us.’

Istithmar’s new real estate vehicle will be its second after the announcement in June of a US$50 million hotel joint venture with CDL, called Tune Hospitality Investments.

Istithmar also has a stake in the CDL Hospitality Trusts, and in the past year has made seven real estate investments in the region.

DWG’s real estate portfolio is currently worth US$60 billion in terms of asset and development value. In Asia, it is committing US$30 billion in India alone and expects to expend the same amount in China, Dr Yu said.

And apart from Singapore, it also has investments in Vietnam and Thailand.

The third partner in the South Beach development is the El Ad Group (EAG), run by Israeli billionaire Yitzhak Tshuva.

EAG may be an as-yet unfamiliar name here, but it is no stranger to CDL. Apart from buying The Plaza Hotel in New York from CDL executive chairman Kwek Leng Beng and his partner in 2004, EAG is also a joint venture partner with CDL on its upcoming Leonie Hill luxury condo development.

With the global economy still in the throes of a credit crunch, real estate investments here had been expected to slow down. Yet, EAG president and CEO Miki Naftali said: ‘The quality and range of our properties have tended to insulate us from pressures associated with the so-called global credit crisis.’

He added that ‘credit remains available to us’.

EAG has a real estate portfolio worth over US$7 billion, and it expects to invest in Asia ‘as part of our worldwide strategy of adding value’.

Mr Naftali also said that it is seeking opportunities to introduce the iconic Plaza brand here, as well as in Tokyo, Shanghai and Beijing.

Other investors from the Middle East that have made an impression here this year include Emirates Investment Group, which has a stake in the upcoming Ritz-Carlton Residences in Cairnhill, and Kuwait Finance House, which bought two blocks at Reflections @ Keppel Bay.

Source : Business Times - 28 Sep 2007