Brookfield bets on Dubai real estate, defying war concerns

[DUBAI] Private equity giant Brookfield Asset Management is setting up a new property joint venture in Dubai with Gulf consumer giant Alshaya Group, a bold bet on the city’s real estate market even as the Iran war enters its third month.

The firms will develop a 480,000-square-foot mixed-use project in the upscale Dubai Hills neighbourhood, according to a statement on Thursday (May 7).

Brookfield Properties will serve as development and real estate manager for the venture that marks the investment firm’s first big-ticket foray into the region since the war began.

The move is a significant bet on the Dubai real estate market. A flood of expatriates and international investors in the years leading up to the conflict had transformed the city into one of the world’s hottest and had started to draw interest from institutional investors.

But the regional conflict has dented demand, and values for homes have started to drop for the first time since the global pandemic. For Brookfield, the deal reflects “conviction in the long-term fundamentals of the region,” said Jad Ellawn, managing partner and regional head for Brookfield Middle East.

Brookfield is among the biggest foreign investors in the Middle East and has shown a continuing appetite for dealmaking in the Gulf. It is among firms considering buying a stake in Kuwait Petroleum’s pipeline network, while Blackstone has unveiled two deals since the war began.

The Brookfield deal is another example of how alternative asset managers are increasingly looking at the Middle East for investment tie-ups that go beyond just using it as a source of capital.

The firm has close ties to the region, and its boss Bruce Flatt flew to Abu Dhabi in April to meet Crown Prince Sheikh Khaled bin Mohammed.

Brookfield has made other real estate investments in Dubai in recent years. It helped develop ICD Brookfield Place, one of the city’s most prominent office buildings. It has also bet on the emirate’s luxury housing market, with the Solaya waterfront development offering high-end apartments.

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The new development will feature Grade A office spaces, build-to-rent residential, and retail offerings, according to the statement. Upon completion, Alshaya Group will also establish its new office for the United Arab Emirates on the premises.

A family owned business that first started in Kuwait, Alshaya operates a string of brands including Starbucks, American Eagle and H&M in the region. Its portfolio extends across the Middle East, North Africa, Turkey and Europe. It introduced the Primark and Ultra Beauty brands into Dubai in recent weeks. BLOOMBERG