Sovereign-Wealth Funds Are:
The Abu Dhabi Investment Council announced it was in talks last week to buy a 75% stake in the Chrysler Building. Some New Yorkers were up in arms about the selling of a landmark building to a sovereign-wealth fund, but more than half (56%) of our readers were somewhat complacent about the news. A little more than a quarter (26%) of poll-takers believe this overseas money is just a fad, while 17% feel this is a serious threat to national security. Stuart A. Jackson, managing partner of Maidman and Mittelman, was nice enough to give us his views on these foreign investments on US soil.
"I am surprised that 56% say 'They are here to stay.' I thought more people would appreciate the danger inherent in allowing some foreign countries the opportunity to buy major assets in the US.
"The ports decision did not allow foreign investors to buy ports. The purchase of benign real estate is not nearly as sensitive except from an emotional point of view. People view ports as integral to security and safety in the US. They don't view the Chrysler building in same fashion.
"At best these sovereign-wealth funds have a benign interest in just having profits associated with assets they buy. But looking at it from a negative point of view, countries like Iran, if they were to use buying power associated with the price of oil, might put us to a substantial disadvantage if they invested in scientific, electronic or manufacturing assets used in our national defense.
"In the world today, we use economic pressure against our enemies because it is easier to do that than to go to war. You would expect economic pressure would be utilized against us by those who have the ability to do so, and more people would be alert to the inherent danger in that happening.
"Foreign companies buying US buildings has happened before. But it did not involve anybody we would at the time have considered an enemy, like the Soviet Union in its day or Iran today. Many years ago, the Japanese would buy anything and everything in the US and Hawaii. Their purchases were fostered by the tremendous values created in Japanese real estate. All investments came back when Japanese real estate investments crashed. The Japanese had overpaid for assets they purchased and were unable to sustain them.
"When we have a depressed dollar and foreign currencies are on the increase relative to the value of the dollar, and the price of oil is as high as it is, people with access to petrodollars would attempt to use those dollars as a tool to buy assets in a place like the US."
Want to continue reading?
Become a Free ALM Digital Reader.
Once you are an ALM Digital Member, you’ll receive:
- Breaking commercial real estate news and analysis, on-site and via our newsletters and custom alerts
- Educational webcasts, white papers, and ebooks from industry thought leaders
- Critical coverage of the property casualty insurance and financial advisory markets on our other ALM sites, PropertyCasualty360 and ThinkAdvisor
Already have an account? Sign In Now
*May exclude premium content© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
