• Arkapita manages US$1 billion in industrial and logistics real estate assets across the Gulf Cooperation Council (GCC) countries and aims to double that figure by 2025.
• The portfolio is backed by a group of sovereign wealth funds and a select group of global investment institutions and investors.
October 22, 2023 – Arkapita Group Holdings Limited, a global alternative investment firm, (Arcapita) manages a US$1 billion industrial real estate portfolio, positioning it as one of the largest industrial real estate investment platforms in the Arabian Gulf region today, with Arcapita expecting to double the value of its industrial real estate portfolio under management in the Gulf region to US$2 billion by 2025.
Arcapita began implementing its industrial real estate investment strategy in 2010 by establishing a series of investment portfolios and funds specializing in industrial assets, thereby growing its assets under management through the acquisition of diverse properties leased to a broad base of tenants, including major global corporations and leading regional and local companies. Arkapita’s industrial and logistics real estate portfolio now comprises more than 3.5 million square meters of built-up space spread across more than 30 properties, leased to more than 80 tenants, the majority of which are located in the Kingdom of Saudi Arabia and the United Arab Emirates.
Concurrently, Arkapita today released its report on the logistics landscape in the Kingdom titled: “Opportunities and Future Outlook: The Growing Logistics Sector in Saudi Arabia,” which focuses on the increasing demand for industrial real estate assets, driven by the growth in e-commerce demand, estimated at 21% over the period from 2022 to 2027.
The report examines the gap between supply and demand for industrial real estate in the Saudi market, which in turn is reflected in high occupancy rates and annual increases in rental rates in the three major cities, Riyadh, Jeddah, and Dammam, according to Knight Frank’s 2023 study. These fundamental market factors are further reinforced by a clear preference for higher-quality properties, along with a continued rise in the number of global tenants who require industrial facilities that meet international standards.
The study indicates that changes in urban and real estate planning in the Kingdom have significantly contributed to a shift in the focus of real estate demand from the south of the capital, Riyadh, to the northern and northeastern neighborhoods, as urban growth has shifted, which has consequently led to the relocation of e-commerce companies and third-party logistics providers to these new neighborhoods. Similarly, the city of Jeddah enjoys a strategic location on maritime shipping routes and access to more than 260 ports across multiple continents, making investment in the industrial real estate sector pivotal for the city, which requires investors and developers to consider these shifts and the opportunities they present for the development of the industrial real estate sector.
It is worth noting the Kingdom’s efforts to transform the logistics services environment, with the government’s recent launch of the “Master Plan for Logistics Centers,” which includes the development of more than 100 million square meters spread across 59 logistics service centers, within the broader framework of the National Strategy for Transportation and Logistics. These plans aim to develop the logistics sector, improve international trade networks, and attract global supply chains and financing, with the goal of making the Kingdom a global logistics hub.
In this regard, Youssef Al-Abdullah, Executive Director and Head of Investment for the Middle East and North Africa region at Arcapita Group, stated: “Industrial real estate, particularly logistics real estate, offers investors the opportunity to participate in the Kingdom’s unprecedented development, especially considering that the logistics sector is central to achieving Vision 2030. Arkapita enjoys a leading local position that supports its ability to capitalize on the expected growth in this sector, given its extensive and long-standing experience in the Saudi Arabian markets. Furthermore, our new investments will add significant value for our investors and clients.”
It is worth noting that Arkapita has successfully managed industrial and logistics real estate transactions worldwide totaling approximately $6 billion over the past 25 years, including investments valued at US$1 billion in the Arabian Gulf region.
