Geographically tiny but financially mighty, Bahrain keeps on keeping on when it comes to investing in U.S. commercial real estate. Bahraini investors deployed $982.7 million into 30 U.S. properties during the year ending in second-quarter 2023, according to MSCI Real Assets.
Per MSCI data, this dollar amount ranked No. 8 among foreign sources of capital into U.S. commercial real estate during that time period. Bahrain finished just behind nearby United Arab Emirates, another moneyed Middle Eastern powerhouse. It’s familiar territory for Bahrain: During the 2022 calendar year, the little island country in the Persian Gulf was 10th among overseas sources of funding. In 2021, it was fifth.
It’s worth noting that in dollar terms, Bahrain’s deal volume plummeted 67% from midyear 2022 to midyear 2023. That’s a significant amount, to be sure, but not out of the ordinary given the state of commercial real estate investments, cross-border or otherwise, over the past year. Of the nine other countries among the top 10 foreign funding sources in that time frame, six posted annualized declines, and five of these pullbacks topped 30%.
Possibly more prescient than the large dip by Bahraini investors as a whole is the activity of the nation’s most prominent stateside real estate investment entity — the aptly named Investcorp, a global funds manager for institutional and private clients with offices worldwide. Among foreign buyers of U.S. commercial properties, InvestCorp snapped up 14 stateside properties and posted the eighth-largest dollar volume for the year ending in Q2 2023, MSCI reported.
The firm has remained proactive since then, announcing a $216 million purchase of an industrial portfolio this past September. The acquisition, peppered across five markets (including Atlanta, Boston and San Antonio), spanned some 1.6 million square feet across 31 infill warehouses with a collective occupancy rate of 94%.
The move pushed Investcorp’s industrial holdings within the U.S. to about 42 million square feet across more than 600 buildings with an aggregate value of $4.8 billion. “Industrial assets have enjoyed consistent performance throughout the recent market volatility as a result of strong fundamentals that are driving outsized demand and considerable rent growth when compared to other asset classes,” said Herb Myers, the company’s co-head of North American real estate, after the September acquisition.
That’s a ringing vote of confidence in U.S. industrial real estate resilience from Bahrain’s most active overseas investment company. Coupled with the strong record for Bahraini investors in recent years, it seems safe to expect another relatively robust year in 2024 from the Middle East’s little investment engine that could. ●
