Bahrain’s Investcorp to spend $1bn on real estate across GCC

Investcorp/Twitter

• Manama-based company reveals five-year investment plan
• It has just bought its first Saudi property, a Dammam warehouse

Investcorp is planning to invest up to $1 billion in the GCC real estate market over the next five years, it said on Tuesday.

The Bahrain-based company’s announcement follows its first property acquisition in Saudi Arabia: a 215,000-sq-ft temperature-controlled warehouse in Dammam. Investcorp is assessing $100 million worth of potential real estate investments in the kingdom.

The Dammam warehouse, which can store up to 32,000 pallets, will bring the value of Investcorp’s warehousing logistics investments to over $4 billion. This represents approximately 42 million sq ft of industrial space.

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Hazem Ben-Gacem, co-CEO of Investcorp, said: “The Saudi Arabian real estate market is experiencing strong growth. The logistics and industrial sectors have enormous potential as key pillars of Saudi Arabia’s Vision 2030 agenda to transform the kingdom into an industrial powerhouse and a global logistics hub. 

“Investcorp is a natural partner in this growth journey, and this acquisition leverages our global experience investing in the logistics sector – particularly in the US, Europe and India.” 

Ben-Gacem added: “This is the first in a series of investments that we are planning to make in the near future with a view to investing $1 billion over the next five years.”

The deal comes as Saudi warehouse rents rise thanks to expanding manufacturing and retail activity. 

Property consultancy Knight Frank estimates that Riyadh’s warehouse rents averaged $66.66 per sq m in the third quarter of 2022, up 22 percent year-on-year.

Occupancy in the Saudi capital was 96 percent, the same as in Jeddah, where warehouse rents also rose 22 percent to $47.73 per sq m. 

Rent pressures will persist until new and better warehouse are built, according to Knight Frank. It is forecasting a 5 percent increase in Riyadh’s warehouse space by 2025. 

The property consultancy said the city’s existing stock consisted mainly of low-quality, ageing warehouses near the dry port, which is not what occupiers are looking for. 

Babak Sultani, head of GCC real estate at Investcorp, said he saw long-term growth dynamics in the region’s warehousing market, particularly in Saudi Arabia. 

“We have ambitious plans across diversified real estate sectors that support healthcare, education, entertainment, consumer goods, tech-enabled services, manufacturing, transport and logistics, and industrial services,” he added.

The Dammam acquisition follows another investment in the GCC logistics sector. In September, Investcorp’s Gulf Pre-IPO Growth Fund led a $100 million financing round in TruKKer Holding, Mena’s largest digital freight network. 

Since Investcorp established a presence in the kingdom, it has publicly listed four Saudi businesses on Tadawul. 

As of December, Investcorp’s portfolio companies employ over 20,000 people in Saudi Arabia. 

Investcorp had $42.7 billion in assets under management at the end of June, with real estate accounting for $10 billion of the total. It has invested in real estate sub-sectors as part of a strategy to shield its portfolio from global market volatility and Covid-19.

The company has 13 offices across the US, Europe, GCC and Asia.