Viewpoint

A shift in the wind

Imtiaz Muqbil

Years after India launched the 'Look East' policy in order to create a more balanced world order, the Arab world is beginning to do the same - and both India and Asia stand to be substantial beneficiaries.

When Saudi King Abdulla took power after the death of his brother King Fahd in August 2005, it was no surprise that his first foreign trip abroad in early 2006 was to China, India, Malaysia and Pakistan - sending a clear signal as to where the Saudis see their future foreign relations evolving.

Earlier this year, the UAE Prime Minister Sheikh Mohammed bin Rashid Al Maktoum also visited India to boost two-way flows of investment, trade and travel. Not surprisingly, Saudi and UAE investors are sizing up India and indeed the rest of Asia.

Investments in hospitality

Over the next few years, India will be hearing a lot more from groups like Emaar, Istithmar, Nakheel, Tameer and Rakeen as well as hotel groups like Kingdom Hotels, Jumeirah and IFA Hotels & Resorts. Indeed, heavy-duty investments are already under way. The Emaar Properties group has teamed up with Accor to bring the Formule 1 brand of budget hotels to India. The new venture has planned investments of US$ 300 million over ten years.

In total, Emaar Properties has committed US$1 billion - claimed to be India's largest ever foreign direct investment in the real estate sector - to develop several projects including master-planned residential communities and special economic zones over the next 10 years.

Kingdom Hotel Investments (KHI), the company chaired by Saudi investor Prince Alwaleed bin Talal is investing heavily in Asia but has yet to plant a flag in India. Listed on the Dubai and London stock exchanges, the Dubai-based hotel and resort acquisition and development company focuses on first-class and luxury market segments in markets such as the Middle East, Asia, Africa, emerging markets and Europe.

It has "strategic partnerships" and ownership links with Four Seasons Hotels & Resorts, Fairmont Hotels & Resorts and Mövenpick Hotels & Resorts. By extension, the company also gains interests in sub-brands. For example, Fairmont Raffles Hotels International, headquartered in Toronto, owns and manages 120 hotels in 25 countries under four brands, Fairmont Hotels & Resorts, Raffles Hotels & Resorts, Swissôtel Hotels & Resorts and Delta Hotels as well as vacation ownership properties managed by Fairmont Heritage Place.

Asia a safer bet

The desire to expand into the relatively more stable and high-growth markets of Asia has been motivated by the somewhat unpredictable nature of the Middle East market where KHI's interests were affected last year by the September 2006 war in the Lebanon, which also had a corresponding impact in Syria, where KHI owns the Four Seasons Hotel in Damascus.

In the last 12 months, KHI has announced six hotel projects in choice leisure and business travel locations of China, Thailand, Vietnam, Malaysia and the Philippines. These include a 287-room property in Kunshan (China), a fast-growing economic and industrial hub in the Pearl River Delta region near Shanghai, the 100 per cent purchase of a hotel in Phuket for US$ 98.5 million, which was converted to a Mövenpick property, and the purchase of land in Phang Nga, near Phuket, to develop a first class resort and residences at a cost of US$ 115 million.

Other properties include the acquisition of a beach site in Da Nang (Vietnam) to develop a luxury Raffles resort and residences for an estimated US$ 65 million, and the Four Seasons Hotel in Langkawi (Malaysia), for US$ 114.2 million with 91 suites.

Last March, KHI bought a plot of prime freehold land in the Manila central business district to develop two hotels and residences in co-operation with a local Philippines developer at an estimated US$ 152 million.