QInvest to avoid Europe real estate this year
Cannes, March 15, 2013
The real-estate arm of Qinvest, the Qatari investment bank that helped fund London's Shard tower, will focus on the US and its home market and avoid Europe this year, a top executive said.
The European market is increasingly crowded and facing the twin pressures of a fragile economy and fresh central bank liquidity driving up asset prices, Qinvest head Craig Cowie told Reuters. That is encouraging the company to channel its approximately $200 million of available property investment capital elsewhere, he said.
Qatari investors have been big post-financial crisis buyers of prime European real estate, from Harrods department store in London to the Peninsula Hotel in Paris. Qinvest has specific limitations, however, as it is not a deep-pocketed sovereign wealth fund and as it applies Sharia Islamic rules.
With targeted returns of up to 6 percent and over, the bank's plan is to focus on assets in US retail - such as single-tenant units on New York City's Fifth Avenue - and in the less liquid and less crowded Qatari market.
"This year we are going to try and do a little bit more in Qatar and the North American market," Cowie said in an interview on the sidelines of the MIPIM property conference in Cannes. "The European market is just getting very crowded again."
Qinvest is a unit of Qatar Islamic Bank and is in the process of taking over Egyptian investment bank EFG Hermes , though regulators have yet to approve the deal.
Cowie declined to comment on the situation beyond saying it was up to the regulator to decide. If the deal goes ahead, given that EFG does not have a real estate operation, Cowie said his division would probably continue investing as before.
Qinvest's European investments, including the Shard and industrial property assets in Paris, were acquired around two years ago at a time when debt was harder to come by and when financially robust investors were in shorter supply, Cowie said.
The bank has since sold its stake in the Shard.
"There's lots of new equity washing around - Chinese, Malaysian, North American," he said. "It's a lot more crowded and harder to do off-market or discreet deals. It's tougher to compete."
Cowie, a South African who previously worked for Al Rajhi in Saudi Arabia before joining Qinvest, also said that uncertain growth prospects were pressuring returns in Western Europe and putting the brakes on activity elsewhere.
"The world is still fragile ... Some parts of Europe are completely stalled," he added. - Reuters