Viewpoint – US Real Estate Investment: The Next 240 Days

Categories: Viewpoint

Warren Buffett in his highly anticipated annual letter to his Berkshire Hathaway shareholders, published at the end of February, encouraged them to be optimistic, despite the best efforts from those on the presidential campaign trail to convince voters that the model for achieving the American Dream is broken.

He stated that: “For 240 years it’s been a terrible mistake to bet against America, and now is no time to start.” Adding: “America’s golden goose of commerce and innovation will continue to lay more and larger eggs.”

But where does that leave the next 240 days until a new US president is crowned, and are Islamic real estate investors similarly optimistic?

Judging by Qatar’s activities, 2016 seems very positive for US real estate investment. After opening its US office in New York in September, the Qatar Investment Authority wasted no time in acquiring the following month a major joint venture stake in a Manhattan mixed-use development with a projected value in excess of $8 billion.

Continuing to implement its plans to invest $35 billion in North America by 2020, and following Qatar Airways commencing direct flights between Doha and Los Angeles in January this year, the QIA recently acquired a four asset office portfolio for more than $1.3 billion in the City of Angels.

Looking positive so far, and from our own perspective, just as many investors see gold as a safe haven, many Islamic investors continue to be attracted to real estate as “gold with income”. Meanwhile, with the dollar still the international default currency, the US is attracting much of this interest.

Our own 90 North closed a significant (for us at least, but regrettably not compared to the QIA!) $123 million acquisition of Saint Gobain’s North American headquarters outside Philadelphia last month with our Middle East equity partners, with a further significant purchase scheduled for the end of March. The recipe is simple, with modern properties let to investment grade tenants on long leases and investors comparing this to what they’re earning on cash deposits.

So, I’d say that the outlook for the next 240 days looks fairly positive, but I sincerely hope that Donald Trump’s ambitions, when seen in the context of the US’s 240 years of history, doesn’t put too many Islamic investors off.

 

Excerpt of article from Philip Churchill