The reason Jassim Al-Bahar hasn't invested more in SA is that he can't find more opportunities. One of the Kuwaiti billionaire's companies, IFA Hotels & Resorts, has invested more than R500m in property here since 2004.
"But we have set aside a lot more, $500m [about R3,75bn], for investment here," he says. "We would like holdings in resort developments, banks, hotels, tourism and manufacturing."
Al-Bahar is not alone. The Middle East's largest investment companies are moving into Africa - and particularly SA - in a big way.
And it is not just their growing pile of oil money. Merrill Lynch says the Gulf Co-operation Council countries (the GCC consists of Saudi Arabia, Kuwait, Bahrain, Qatar, the United Arab Emirates and Oman) ran a combined current-account surplus of US$585bn in 2005, larger than China's ($521bn).
SA is an ideal destination for these investors, who are highly liquid.
"Hotel investments in Europe and the US will give us internal rates of return between 12% and 15%," says James Wilson, CEO of Nakheel Hotels & Resorts, a subsidiary of Dubai World. Two weeks ago, Nakheel bought the V&A Waterfront with UK property giant London & Regional for R7bn. "We'll get substantially higher return and yields from SA hotel and propery investments," he says.
"Our investments in SA are gift-wrapped in a highly sophisticated legal process, with clear property ownership laws that are easy to follow. We get huge support from local banks and our investment yields are significantly higher.
"Middle Eastern tourists and investors are comfortable in SA," Wilson adds.
What Wilson hints at, Al-Bahar says more directly: "IFA follows its customers. Like other people, Arabs go on holiday to relax, not to be treated like terrorists. So there's a shift in their tourism and our investments away from Europe and America." Outside the Middle and Far East, East Africa and SA are becoming increasingly popular destinations.
IFA is the most visible of the new investors, with high-profile investments in the Zimbali resort in northern KwaZulu Natal and Boschendal in Franschhoek. The company has listed on the JSE and has a market cap of R850m.
But it has large ambitions and wants to be bigger than sector giant Sun International, valued at around R10bn. The FM is aware of at least two resort developments IFA is negotiating.
Less visible but almost as active and more diverse is Kharafi Holdings, the African arm of 100-year-old Kuwaiti family giant Mohammad Abdul-Mohsin Al-Kharafi & Sons. They moved their Africa headquarters to Pretoria in 1994 and have build up a significant portfolio since than. (See adjacent story.)
Africa MD Mahmoud Shehata says Kharafi's total investment in Africa is over $10bn if Egypt is included. The company is best known in Africa as a construction company, but investments also include farming, restaurants, hotels, resorts and other manufacturing.
"We are considering listing on the JSE," he adds. The company gives work to thousands of SA artisans, designers and consultants, and uses SA materials on projects. "We have 300 SA artisans working on a conference centre in Gambia alone," says Shehata.
Kharafi chairman Nasser Al-Kharafi is the 29th-richest man in the world, according to Forbes magazine, with an estimated net worth of US$14bn.
Al-Bahar says Arab investors prefer to be first into an area and build up their investment over a long time. He is modest about what impact they will have on SA: "Our wealth is exaggerated. We have poverty and unemployment in our own countries and our investments are a drop in the global sea."
SA, with more than R10bn invested so far, is itself a drop in the ocean for many of the GCC firms, which invest hundreds of billions into US and European portfolio and private equity investment each year. But there is little doubt that many billions of Arab dollars are headed for SA over the next decade.
Financial Mail
Publisher: I-Net Bridge
Source: I-Net Bridge
