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November 16, 2016

Saudi Arabia’s Public Investment Fund (PIF) is on the brink of a global investment drive, with the potential to change the landscape of global real estate markets.

Created in 1971, the Arabian Sovereign Wealth Fund has recently undergone a period of structural reform in line with the ‘Saudi Vision 2030’ to reduce the country’s dependence on oil by diversifying its economy. While details around investment strategy and key personnel are still being kept tightly under wraps, the Fund is expected to start actively and publicly communicating their plans imminently, and the implications for real estate could be significant.

Since restructuring, PIF made its public debut when it acquired 5 percent of the ride-sharing service, Uber, for US$3.5 billion earlier in 2016 – an investment that is widely considered as a mere drop in the ocean, given the Fund’s potential power.

According to the Kingdom’s Deputy Crown Prince, Mohammed bin Salman, PIF could eventually control US$2.5 to US$3 trillion, which will be achieved by floating a 5 percent of stake in Saudi Aramco and transferring rest of its shares to PIF. “When it opens for business, under its new mandate, PIF is poised to become a hugely significant global real estate player . If the Saudi government manages to successfully implement its privatisation plan, PIF’s fire power will become second to none.” says Fadi Moussalli, Head of JLL’s International Capital Group in the Middle East and North Africa (MENA).

While PIF’s current real estate investments are limited to a number of large-scale development projects in Saudi Arabia and the wider MENA region, Moussalli believes it is only a matter of time before it expands its horizons into the global market.

“The size and scale of PIF will dwarf the majority of its regional and international Sovereign peers”, he says.

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Fadi Moussalli

Capital Markets, JLL MENA

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