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Warren Buffett’s UAE brokerage to launch institutional investor unit

Warren Buffett’s UAE brokerage to launch institutional investor unit

Berkshire Hathaway HomeServices Gulf Properties, the new UAE affiliate of billionaire Warren Buffet’s US brokerage, plans to launch a specialist advisory unit for GCC institutional investors, and expects to scale up its core operations through mergers and acquisitions from this year.

One such deal is expected to conclude in the next month, after the firm received a high volume of inquiries from smaller brokerages wanting to benefit from its parent’s resources in the run-up to opening the Dubai office last week, chief executive Phil Sheridan told The National.

“It’s fair to say the majority of registered brokers in Dubai operate within very small firms – they do a good job but they don’t have the same reach or brand strength [as us],” said Mr Sheridan, chief executive of Berkshire Hathaway HomeServices Gulf Properties.

“We’ve had a good number of inquiries from brokerages so far, and expect a runaway train effect as we become better known.”

There will be other meetings over the coming months, and the company is targeting deals with mid-sized brokerages of between 10 and 30 agents, he added.

The launch of Berkshire Hathaway HomeServices Gulf Properties in Dubai last week marked the fourth global franchisee of Berkshire Hathaway HomeServices, following Rubina Real Estate in Berlin, Kay & Co in London and Maggi Properties in Milan.

Chairman Ihsan Al Marzouqi and Mr Sheridan are heading the company alongside a team of 30 real estate advisers and support staff, which is set to expand over the coming months. There are also plans to open an Abu Dhabi office by the fourth quarter of this year – “or earlier, based on current demand”, the chief executive said.

Mr Buffet’s Berkshire Hathaway first acquired a stake in HomeServices of America as part of the purchase of its parent company, an energy business, in 2000. It began operations as Berkshire Hathaway HomeServices in 2013 and has around 50,000 advisers and 1,450 branded offices – of which a quarter are wholly owned subsidiaries and the rest franchisees.

The UAE operation is a linked affiliate of the parent company and has access to its financial resources, property and investor database, and research and development team based in California.

The aim is to tap into latent demand among US investors – and other prospective homebuyers – for UAE property, while introducing UAE investors searching for overseas property to its US and European database. This international segment is expected to account for 10 per cent of the core residential brokerage business, while UAE-based transactions are expected to make up the rest.

The company will set up a dedicated advisory team for institutional investors this year, after receiving an “overwhelming response” from governments, private equity investors, master developers, real estate investment trusts and other investment firms in the region. “It’s very much on the agenda and we need to move quickly,” Mr Sheridan told The National.

The new unit could be expanded beyond pure brokerage services, to encompass the acquisition and sale of distressed assets in the UAE.

Property values in the UAE declined in the wake of a three-year oil price slump, which has constrained consumer purchasing power and driven a fight for affordability across the emirates.

“There is no doubt that because of the real estate market fall in recent years there are opportunities for institutional investors,” the chief executive said. “Obviously, the financial backing of our parent allows us the opportunity to elevate and go beyond the brokerage side of things, as we work to create not only one of the most credible property agencies in the UAE, but also one of the most successful.”

The current low point in the cycle provides more opportunities for Berkshire Hathaway HomeServices Gulf Properties than if it had entered the market during a competitive boom, but this was not its only objective, Mr Al Marzouqi said.

“While the UAE has tapped markets like the GCC, China and India, it is not yet sufficiently exposed to the US, where we can source new buyers for UAE real estate,” he said.