New York: Brookfield Property Partners LP and Qatar Investment Authority formed a joint venture on Manhattan West, an $8.6 billion (Dh31.6 billion) mixed-use project under construction on New York’s far west side.
Plans for the 650,000-square-metre development call for five buildings, including a 62-story, 844- unit residential tower that’s already in progress and a 67-story office skyscraper that will be anchored by the law firm Skadden, Arps, Slate, Meagher & Flom LLP and is scheduled for completion in 2019. Qatar Investment Authority will acquire a 44 per cent stake in the project, the companies said in a statement Wednesday.
The deal expands the sovereign wealth fund’s global investments, which include acquisitions this year of London’s Canary Wharf Group and parent Songbird Estates Plc, both in partnership with Brookfield. Investors from around the globe are gravitating to Manhattan real estate as a safe place to park cash, pushing prices to records. Office-building values in big cities such as New York are 56 per cent higher than they were at the previous peak in 2008, according to Moody’s Investors Service and Real Capital Analytics Inc.
Early bird
“I don’t think anybody invests in New York real estate today expecting 20 or 30 per cent returns,” Michael Cohen, tri- state regional president for brokerage Colliers International, said in a phone interview. “I’m sure that safety is a factor, but they’re also something of an early bird,” he said of Qatar Investment Authority, because development of the far west side is just beginning.
Manhattan West is part of a wider effort to draw the Midtown business district farther toward the Hudson River, led by Related Cos’ $20 billion Hudson Yards development over the Metropolitan Transportation Authority train depot, immediately west of Brookfield’s project. Plans for the area, stretching from 28th Street to 43rd Street, include 26 million square feet of offices, 20,000 housing units, 2 million square feet of retail and 3 million square feet of hotel space, according to the Hudson Yards Development Corp. website.
Last month, the MTA opened a $2.4 billion extension of the 7 subway line into the Hudson Yards area, a key part of the city’s commitment to the success of the area’s transformation.
Brookfield said in April it would start building its 1 Manhattan West office tower after signing a lease with Skadden, Arps for 550,000 square feet — about a quarter of the skyscraper. That jump-started construction at the project, bounded by 31st and 33rd streets and Ninth and 10th avenues.
Qatar Investments
Sovereign wealth funds are increasingly seeking ways to make direct investments in real estate to circumvent the fees and terms of traditional private equity funds. Qatar Investment Authority opened a New York office in September to better access deals in the US and to manage its growing investment portfolio in the country. Qatar has said it plans to invest $35 billion in the country over the next five years to diversify its assets.
Qatar’s sovereign wealth fund is the world’s ninth-largest, with assets exceeding $250 billion, according to the London- based Sovereign Wealth Fund Institute, and the biggest exporter of liquefied natural gas. Earlier this month, Qatar Investment Authority expressed an interest in buying a minority stake in Swiss-based Glencore Plc’s agriculture business, according to three people familiar with the conversations. The fund’s direct- investment arm is already one of Glencore’s largest shareholders.
The fund has also pared some investments amid the slump in oil prices. Two weeks ago, Qatar Investment Authority said it sold its 10 per cent stake in German construction company Hochtief AG for 540 million euros ($615 million), its third disposal in three months.
