Dubai buys $1bn in US apartments

Gulf Emirate Dubai is investing heavily in class B apartments in the US Sunbelt via their private equity vehicle Dubai Investment Group.

Dubai Investment Group (DIG), a private equity fund controlled by the government of Dubai, is teaming up with New York-based real estate investment firm The Milestone Group to buy $1 billion (€ 771 million) in apartments in the Southeastern US.

The deal consists of 21,000 apartments in 69 properties throughout Dallas/Fort Worth, Phoenix, Atlanta, Nashville, Austin, Texas, Tampa, Florida and Jacksonville, Florida. DIG reportedly paid about $47,600 for each unit, well below the average found on the hard-hit Sunbelt apartment market. The seller is Addison, Texas-based Olympus Real Estate Partners.

According to a statement released by The Milestone Group, the deal makes the Persian Gulf Emirate one of the largest apartment owners in the US.

“The properties have significant upside potential and will benefit greatly by the infusion of capital,” said Mohammed Al Gergawi in a statement, the chairman of DIG and the chief executive officer of Dubai Holding.

Dubai Investment Group is a subsidiary of Dubai Holdings and was set-up to invest outside the Middle East. Dubai Holdings was founded by Sheikh Mohammed bin Rashid Al Maktoum of Dubai. Dubai Investment Group was formerly known as The Investment Office and began investing in US real estate with its subsidiary Longwing Real Estate Ventures in 2003.

In related news, another Dubai government buyout fund, Dubai International Capital, purchased Chessington, UK-based waxworks and theme park operator Tussauds Group for £800 million ($1.5 billion; €1.2 billion) from London-based buyout firm Charterhouse Capital Partners