Where have all the $$$ gone? Millions of dollars worth of Arab investment capital are claimed to have left the US since President Bush declared his war on terror. London was considered the likeliest recipient but the evidence is inconclusive.

Author:Brown, Guy
Position::Business & Finance
 
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The private wealth of the Gulf Cooperation Council (GCC) member nations held abroad is reckoned at well over $1 trillion and, understandably, competition for a slice of the lucrative GCC pie is intense. The private wealth abroad of Saudi Arabians alone is conservatively estimated at $700bn. Arab investment abroad is split respectively 60/30/10 between the US, Europe and other markets. However, over the last few months there have been rumours of a shift of alliances, away from the US and towards London.

Given the prominence of London as a financial centre, Arab investments in the UK already amount to tens of billions of pounds. The English capital is an important international investment hub, providing stability, depth, and a variety of investment vehicles. It is fully capable of handling the billion-dollar wealth of even the richest Gulf royal family members and entrepreneurs.

Arab investment interest in the UK is long established but, according to speculation, the flurry of bitter exchanges between the US and Saudi Arabia in the latter part of 2002, suggest London may have assumed added importance to Arabs looking to transfer capital out of the US. Faisal Radwan, senior manager of private banking for Saudi British Bank (SABB) says Saudi private investors have their UK investments predominantly in real estate and equities. SABB provides full commercial banking services to its individual and institutional customers and also assists them in buying property in London, providing home finance, expert advice, and market surveys through its branch office in the English capital, which helps it keep a `finger on the pulse' of financial developments.

Real estate is a long term favourite for Arab investment in London. According to reports in The Times, in 2001 Saudi Arabia's Prince Waleed bin Talal bin Abdul Aziz won a bid to buy an entire square in London at a value of 335m [pounds sterling]. According to The Guardian newspaper, the Asturion Foundation is used by King Fahd to manage his worldwide property portfolio, which includes UK assets such as Kenstead Hall, a mock Tudor mansion in north London's `Billionaire's Row'--The Bishop's Avenue in Hampstead. However, the full extent of capital involved in Gulf-UK investments is obscured by a lack of transparency and unclear rules on sovereignty concerning tax exemption. Such discretion is an additional attraction for Arab investors wishing to keep a low profile.

London draws the most inward investment...

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