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Giant Investor ADIA Goes Cool On Offices And Retail

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The Oracle shopping centre in Reading

One of the world’s largest owners of real estate is considering shifting its investment strategy away from retail and offices as it readies itself for a post-pandemic world.

The Abu Dhabi Investment Authority is considering investing less in offices and retail, and putting more money into logistics, life sciences, tech hubs and affordable housing, Bloomberg reported. The move has been prompted by the poor performance of some of its office and retail assets during the coronavirus pandemic, and it may look to sell some of its worse performing assets, the report added.

ADIA, one of Abu Dhabi’s sovereign wealth funds, is the world’s fourth-largest investor in real estate, with $43B of equity invested in the sector, according to 2020 rankings compiled by IPE. That’s out of total assets of $578B, or a 7.5% allocation to the sector. Allianz, APG and China Investment Corp. are the three largest investors. 

The strategy is epitomised by amendments it made earlier this year to a large scheme it is building in Slough, a town 25 miles to the west of London. 

It paid £130M in 2016 for two shopping centres on a 14-acre site that it planned to redevelop into a mixed-use scheme comprising retail, offices and homes. In 2019 it cut back the amount of retail in favour of more offices. Then in March it decided to cut the amount of offices in the scheme from 1.8M SF to 538K SF, and increase the number of homes, many of which will be for rent, from 1,100 to 2,500. It is also looking to sell its stake in one of the largest UK shopping centre holdings, the Oracle centre in Reading, also to the west of London, for £150M. 

A 550K SF office tower the company has built in the La Défense district of Paris is only 10% leased after completing in late 2020.

ADIA has been a big investor in logistics in Asia via a Chinese joint venture with Prologis. But life sciences would be a new sector for the investor, following the lead of other institutions like Oxford Properties and AXA in looking to tap into the growing market. 

ADIA saw three of its top real estate execs leave the company in 2020. Global Head of Real Estate Tom Arnold, European Head of Real Estate Pascal Duhamel and acting Asian Head of Real Estate Anthony Bertoldi are all yet to be replaced, Bloomberg said.