First phase of Arzanah sales have begun

Abu Dhabi // Arzanah, the flagship residential project under development by a partnership between Mubadala and CapitaLand, launched its first phase of sales today. The release of 14 villas and 800 apartments in the Rihan Heights section of the project for sale has commenced. Emiratis who registered at Cityscape will now have a chance to buy in at Arzanah, the developers said. Foreigners will not be allowed to buy into the development, as it is not in a leasehold zone.

The 1.4 million square metre project will be located at the southern end of Abu Dhabi island, in Zayed Sports City. There will be townhouses and apartments for about 18,000 people. At the heart of the project is Zayed stadium, but the project will also include an aquatic centre, bowling alley, ice rink, tennis complex and the UAE's first medical facility dedicated to sport medicine. Mubadala, a government-controlled investment group, unveiled its property and hospitality division at Cityscape Abu Dhabi in May with the goal of taking a large role in the development of the emirate.

The partnership with Singapore-based CapitaLand, called Capitala, will become Mubadala's residential development arm, while another partnership with the John Buck property company in Chicago, called John Buck International, will handle Mubadala's commercial projects. In addition to Arzanah, Mubadala has announced an agreement with KOR Hotel Group to build properties under two brands, The Tides and Viceroy; a partnership with MGM Mirage to build 150 acres of leisure and entertainment facilities in Mina Zayed; and a 570,000 square metre downtown business district with a new headquarters for the Abu Dhabi Securities Exchange on Sowwah Island.

Mubadala also invested about US$600m (Dh2.2bn) in a large development project in Malaysia called Iskandar. bhope@thenational.ae

Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.

Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.

“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.

Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.

“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.

Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.

From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.

Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.

BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.

Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.

Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.

“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.

Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.

“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.

“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”

The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”