The Omicron COVID-19 variant may threaten to derail economic growth, but Islamic investors are strategically investing into the US real estate market on the back of a bullish outlook underpinned by promising sector recovery and promising policies, VINEETA TAN writes.
Investors from across the GCC are capitalizing on this momentum including Bahrain’s GFH Financial Group, Kuwait’s Wafra International Investment Company and the UAE’s Gulf Islamic Investment (GII). This week, GII confirmed it invested some US$100 million into acquiring its first asset in Virginia. The Glen Forest Office portfolio comprising suburban office development in Richmond raised the firm’s US real estate assets under management (AuM) to over US$350 million and a total AuM of US$3 billion. This portfolio is GII’s second US commercial property acquisition this year: in July, it acquired an office campus in Jacksonville, Florida.
Meanwhile, GFH and Wafra International joined hands to purchase a portfolio of US-based blue-chip logistics assets leased to FedEx and General Mills. The assets, consisting of eight income-yielding logistics facilities currently being built, are expected to be completed next year as part of a built-to-suit process with leases to commence upon completion. GFH is no stranger to the US market. This year alone, the Islamic investment firm acquired at least four other assets in the US including a US$200 million healthcare portfolio, two multifamily residential sites in Las Vegas also for US$200 million, a US$100 million Ohio logistics facility and a US$135 million distribution facility in Chicago. In June, GFH’s subsidiary GFH Capital exited two of its US industrial portfolios acquired in 2016, which were expected to deliver an estimated 40% return to investors over the holding period.
“We foresee a record year for commercial real estate investment, enabled by high levels of low-cost debt availability and new players drawn to real estate debt’s attractive risk-adjusted returns,” noted Richard Barkham, the global chief economist and global head of research at property investment firm CBRE. “Commercial real estate values will rise, particularly for sought-after industrial and multifamily assets.”
Despite uncertainty over the potential impact of the COVID-19 Omicron variant and other risks, CBRE is maintaining a positive outlook for the economy and commercial real estate in 2022.
“While the new variant will impact the timing of a large-scale return to the office, fiscal and monetary policy remains highly supportive of economic growth. There may be other bumps along the way, notably from the ripple effects of an economic slowdown in China and rising oil prices, but the factors that held back growth in 2021 — labor shortages, supply disruptions, inflation and other COVID variants — will ease,” Barkham shared in his note in CBRE’s 2022 US Real Estate Market Outlook, adding that while together, monetary policy may trigger short-run volatility in the stock market, but it will not be enough to dampen investor demand for real estate.
Supporting this buoyant outlook is also the recently enacted Infrastructure Investment and Jobs Act which would mobilize US$550 billion in new spending on physical infrastructure over the next decade, which may boost commercial property demand as new projects begin.