Source : Business Times - 30 Apr 2008
Dubai World, the investment firm of the Dubai government, said yesterday it is holding on to US real estate assets amid a sub-prime housing crisis that has slowed its investment decisions this year.
Dubai World, with a portfolio of over US$200 billion, is still seeking investments in transport and logistics, financial services and for opportunistic deals in a battered real estate market after a credit crisis that has rattled global markets.
‘I’m more cautious because I don’t think there’s total transparency on how bad the situation is. At the moment we don’t know, and it means a lot for our investment planning,’ its chief investment officer Yu Lai Boon told Reuters in an interview.
He said the concern is that the contagion, which has caused Western banks to write down billions of dollars and caused liquidity to dry up, could spread to Japan and China.
‘If the world’s top three economies are hit, then we have the makings of a worst case scenario. So we have to know,’ he said.
Dubai World, which invests via subsidiaries Nakheel and Istithmar, has a portfolio that ranges from British port operator P&O to New York retailer Barneys, and includes over US$20 billion in real estate outside Dubai.
Mr Yu said Dubai World had sold two buildings in New York near the market’s peak in the first quarter of last year, and reinvested the gains in US markets that have seen corrections, but will retain its remaining US property assets.
‘I don’t think we want to sell right now. I’m happy to keep a holding pattern,’ he said, adding that those properties are giving good rental returns in the meantime.
Mr Yu said he intends to tap the credit markets more to fund future investments in order to maximise the rate of returns.
He declined to reveal the exact value of assets that Dubai World has on its books but said it is well over US$200 billion.
‘We plan to do as any prudent corporation does and that is to add some credit, to work the balance sheet that we have. Otherwise the balance sheet is too lazy,’ said Mr Yu. - Reuters
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