Global investors back GCC industrial growth with Islamic vehicle

Islamic institutional capital is flowing into the GCC swept by powerful undercurrents reshaping the GCC as it cements itself as a gateway between the East and West. Hines, one of the largest private global real estate investment and development firms in the world, and Islamic investment heavyweight Arcapita are among the big names harnessing these trade network expansion opportunities.

These two firms may very likely jointly originate, structure and execute Islamic investments into industrial and logistic real assets across the GCC – provided the joint institutional-grade platform they want to establish comes to fruition.

“Market fundamentals across the region have reached a depth and maturity that support the case for a dedicated, institutional-scale platform rather than a transaction-led strategy,” Martin Tan, Arcapita’s founding partner and chief investment officer, explained. “As GCC countries continue to focus on supply chain resilience and national self-sufficiency, we see a compelling opportunity to help deliver modern logistics infrastructure at scale.”

Industrial/logistics is one of the fastest growing segments of the region’s real estate market, catapulting itself into a major institutional theme amid a phenomenal e-commerce boom, with Arcapita managing one of the region’s largest industrial portfolios.

In the last few months alone, the Bahraini-headquartered firm deepened its logistics exposure with a 30,000 sqm logistics warehouse in Jebel Ali Free Zone and a commitment to develop a 1.4 million sqm purpose-built facility in Saudi Arabia with ASMO, an Aramco and DHL Supply Chain joint venture.

This boom has pushed for the localization of supply chains, resulting in greater need for Grade-A warehousing and last-mile facilities. In a region where serviced lands are limited and planning are constrained, supply simply cannot keep up with the demand, making the proposition lucrative, especially in light of national development agendas, most of which with a 2030 target year.

 “The GCC represents one of the most compelling logistics growth markets globally, supported by demographic expansion, supply chain realignment and government-led industrial strategies,” shared Steve Luthman, the global head of real estate at Hines.

For Hines, this partnership marks an expansion of its Shariah footprint. Managing over US$90 billion in assets, the US-founded global firm was behind the TFI-Hines Brazil Income Real Estate Fund, Brazil’s first closed-end Shariah real estate fund. Co-managed with The First Investor, the 2012 fund was officially liquidated in May last year. The US-founded global firm plans to situate itself in one of the most active Shariah finance markets globally with a dedicated regional office in Riyadh this year.