Dubai: In picking up choice pieces of real estate across geographies, Abu Dhabi Financial Group is on a canter. It has got its hands on two prime locations in Central London, delivered a 1 million square feet mixed-use development in Montenegro and has a further 4 million square feet land bank to spare across the Balkans. And there is the live possibility it could soon become active in the Far East.
“Our approach to real estate has always been [to] take above-average risk,” said Jassim Al Seddiqi, CEO at ADFG. “When we are above opportunistic and above-average risk, it means that we are above development risk also. So, in real estate, we do development, we do junior lending, we do senior lending and so forth.
“We have a lot of experience in Central London historically — like a lot of other investors in the UAE. In general, GCC and UAE firms have been very long-term investors in Cental London. [But] over the past five years, we noticed that London has become more attractive, it is a safe haven.”
That is what encouraged ADFG to make its first high-profile acquisition, taking over 1 Palace Street, a 350,000 square feet building opposite Buckingham Palace. That is as prominent an address you can get in Central London.
ADFG is now well into reconverting the property (though maintaining the original facade since it is a ‘listed’ site) into 72 luxury apartments with price tags from £3 million (Dh16.8 million) to £30 million. A third of the units have been sold since sales opened four months ago, to an eclectic mix of investors and not overwhelmingly to UAE or Gulf investors. That is a detail Al Seddiqi wants to make a fine point of.
“The launch was in the UK — a private launch. The purchasers come from ... Russia, Africa, the Middle East, Britain and India. People want to buy a slice of London, especially foreigners. They are not looking for a modern building. They want a façade which is 200 years old.”
The project is heading for a late 2017 completion and has a development value of £600 million.
Also, late last year, ADFG bought the New Scotland Yard premises — the largest last piece in Central London — and will be rebuilding it from scratch. The details of the plan — to create a mixed-use development — have just been submitted to Westminster Council for approval. The gross development value comes to a substantial £1.46 billion.
For the project, ADFG beat out more than 10 bidders in a global auction. On whether the ADFG plan was to make a grab for a trophy asset and thus make a statement, Al Seddiqi said: “A lot of people ask me this question and I always tell them wait until next year. This is because in 2016, we will announce what we have in terms of plans. People may say we overpaid for it, but today when you buy a trophy — when you buy the largest last piece in Central London — you will not pay peanuts. You have to pay a premium.
“We paid £370 million. It was done as a commercial transaction. Maybe, [the statement] is a by-product of the transaction.
“How do you turn this premium into something economic? London, and especially Central London, is not come and build anything. You have to respect the heritage, you have to respect your surroundings.
“You have to show you are adding value to the city, to the neighbourhood. [With] New Scotland Yard, we will probably start selling [the residences] in 2017 and then lease the offices and retail.” (The New Scotland Yard redevelopment will be rebranded as ‘Ten Broadway’ is to be completed by the end of 2020.)
As for the retail component there, the plan is not to attract the bling set. “Today, people do not pay a premium for bling ... [but] for hip and cool. The retailers who we will attract there are hip and cool,” said Al Seddiqi.
“Even with 1 Palace Street, it is not bling. There isn’t anything which is gold plated. It’s very minimalistic. We are taking a different approach which is proving to be very successful.”
With a presence in Central London already cemented and well on its way with a growing hospitality and real estate portfolio in Eastern Europe, other geographies will come onto ADFG’s radar soon. The Far East is a live possibility.
“I think what has happened in Asia over the last six months or a year is a good opportunity for people who have not already gone in,” said Al Seddiqi. “We have been studying the market for almost one year and positioning ourselves to be selective and opportunistic in entering this market.
“It’s not going to be easy, we are looking specifically at China, Singapore and Hong Kong. Opportunities exist in both mature and emerging markets. It’s opportunistic in a different way.”
