Former Olayan man to bring Middle East Capital to Europe

Karl Abawatt, the former real estate head at Saudi-backed Olayan Group, has set up a new private equity firm, GG Capital.

The Chelsea-based team of four is focusing on commercial assets in the UK and Europe. It has completed its first deal, purchasing 1 New Fetter Lane, EC4, for £69m – a 4.47% yield – from UBS Asset Management’s Triton Property fund on behalf of a private client.

Abawatt said: “We are backed by a few large private families. Most of them are well institutionalised or conglomerates in different industries. The bulk are from the Middle East – Saudi Arabia, Bahrain and Lebanon – but there are some Swiss and Chinese investors.

“The UK still offers an interesting investment rationale for those looking for security of income. London offers an interesting investment portfolio in general. especially for investors from the Middle East that are looking for income-producing assets with long leases.”

UBS recently negotiated a new lease that extends to 2026 on the 101,900 sq ft asset with law firm Sullivan & Cromwell for its European headquarters.

Abawatt said the investor decided to proceed with the transaction despite Brexit uncertainty because of the property’s favourable location and long-term covenant. The deal reflects continued demand from overseas buyers for Midtown assets despite a weakening occupational market ahead of Crossrail becoming operational into Farringdon in 2018.

“London is a core focus of our investment strategy and 1 New Fetter Lane presented a trophy headquarters buildin, well-let in an area where we anticipate a high investment return,” he said.

CBRE acted for GG Capital; Tudor Toone advised UBS.

Middle Eastern Investor’s London volume hits £1bn since Brexit

With GG capital’s purchase of 1 New Fetter Lane and the sale of Regis House, Middle Eastern investment in London’s property sector since the EU referendum exceeded £1bn.

The price of oil crashed at the end of 2015 but recovered by more than 50% during 2016. Despite the drop-off, the advisory firm anticipates this will recover in 2017, in part due to the devaluation of sterling.

Ed Bradley, senior director at CBRE, said: ” Post-referendum London has attracted significant global capital flows from Asia and the Middle East. The capital is proving attractive for Middle Eastern investors owing to a correction in pricing, good returns compared with other major European cities, a cheaper pound and the length of income the city offers. We forecast this trend to continue.”

Middle East investors’ top deals in 2016
– A private buyer advised by Savills bought Regis House, 45 King William Street, EC4, from Aberdeen Asset Management for £105m – a 4.4% yield. GM Real Estate advised Aberdeen.
– Ashby Capital bought a 50% stake in Fitzroy Place, W1, from Kaupthing for £217m.
– Dubai’s Easa Saleh Al Gurg Group bought TH Real Estate’s The Peak in Victoria, SW1, for £145m.
– SRG Holdings bought the High Holborn Estate, WC2, from Blackstone for £136m.
– Qatari’s Alduwaliya Asset Management bought Playstation’s HQ at 10-12 Great Marlborough Street, W1, from Blackrock for £104m.
– Alduwaliya also bought Westerland Real Estate’s London Automotive Factory at 184 Shepherd’s Bush Road, W6, for £100m.
– A private Middle Eastern investor bought Nightingale House, 65 Curzon Street, W1, from National Grid UK Pension Scheme for £80m and plans a £290m development.