Private Equity Real Estate Fundraising in MENA

by Farhaz Miah

  • 11 Feb 2011
  • RE

Fundraising by MENA-based private real estate fund managers displayed visible signs of growth in 2006, when $1.2 billion was raised by 11 funds, an increase from the previous year, when three funds raised a total of $200 million. In 2007, the number of funds closed declined to five, although they raised the same amount of aggregate capital as funds closed in the previous year. Six funds were raised in 2008, garnering commitments of $1.2 billion in total. However, 2009 proved to be a highly challenging year for MENA-based fund managers as no funds closed during the year, suggesting that the adverse affects of the financial crisis and subsequent global recession had impacted the ability of MENA-based firms to raise capital. In 2010 one fund closed, raising $400 million.

58% of all funds raised by MENA-based fund managers between 2005 and 2010 incorporate opportunistic investments into their strategies. Value added strategies are utilized by 23% of the funds closed in the period, while core and core-plus strategies are used by 15% of funds. 8% of funds invest in debt, and a similar proportion invests in distressed real estate assets.

18 funds raised by MENA-based real estate fund managers between 2005 and 2010 primarily target the MENA-region. These funds garnered total commitments of $2.3 billion, with the remaining 8 that invest outside the MENA region raising $700 million. There are currently six funds in market being managed by MENA-based firms; these vehicles are seeking to raise an aggregate $1.6 billion.

Kuwait Finance House is the most prolific MENA-based fund manager in terms of capital raised for real estate funds in the last 10 years, having raised $468 million in commitments. Other notable MENA-based fund managers include SHUAA Partners and AL Futtaim Investment Management (AFIM), which have raised $405 and $385 million respectively in the past decade.

68% of MENA-based fund managers target residential properties, and just under half target commercial properties. 35% of MENA-based fund managers have a preference for office properties, while just over a quarter of fund managers seek to acquire retail properties.

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