Real Estate

Saudi Family Offices Tap UK Logistics Potential

Editorial Staff 27 November 2023

Saudi Family Offices Tap UK Logistics Potential

The story sheds light on how family offices, as examples of "patient capital," are looking at sectors such as real estate, and specifically logistics, as sources of returns over the medium term.

Saudi Arabian family offices clients have been involved in a deal by London-headquartered Oryx Real Estate Partners to buy a five-acre logistics site in Milton Keynes in the UK’s Midlands, the first time Oryx has entered the UK logistics space.

Pembury Real Estate will act as development partner for the project, which has an estimated development value of between £25 million ($31.4 million) and £30 million, Oryx said in a statement earlier this month. The company’s investment pipeline comprises about £300 million of additional logistics sites, offices, residential blocks, and opportunistic distressed assets, with deals valued at up to £50 million in advanced stages of consideration.

The site, fow which a planning application has been submitted, was bought from distribution firm WH Barley, which is vacating the building. Oryx, together with logistics development specialist Pembury Real Estate, will bring forward a new 110,000 square foot speculative urban logistics unit.

The story sheds light on how family offices, as examples of "patient capital," are looking at sectors such as real estate, and specifically logistics, as sources of returns over the medium term. The shift in working and consumer habits, favouring remote working and online retail, has benefited operators of warehouses, sometimes dramatically changing fortunes of properties once seen as less desirable than city centre locations. (The names of the Saudi family offices were not disclosed.)

"This transaction aligns with Oryx’s strategy of identifying suitable sites and developing well-located logistics facilities. The sector continues to witness robust occupier demand and offers an attractive entry price point, with values now stabilising following a period of correction, making it a defensive allocation option amidst wider volatility," the firm said in a statement earlier this month.

Oryx has built a UK real estate portfolio worth more than £180 million since it began deploying capital in 2020. Prominent assets within its portfolio includes 3 Bunhill Row in Central London, which is fully let to international law firm Trowers & Hamlins. Founded in 2019 by Fawaz AlRajhi and Johan Eriksson, Oryx gives international investors with direct access to UK and European real estate investment opportunities, asset management, mezzanine lending and advisory services.

The logistics industry has faced headwinds from higher interest rates and concerns about a global recession, some analysts have noted. According to a note in early 2023 by property group CBRE: "vacancy rates will remain critically low, as build-to-suit development grows, and rising cost of finance and higher exit yields create a challenging environment for speculative development. Following a period of sustained repricing, logistics yields will stabilise. Industrial and logistics assets will remain attractive to investors with continued rental growth expected." 

"Automation and advancement of electrical transportation will increase demand for power. A lack of sufficient power will become a deal breaker for occupiers when assessing potential buildings and sites," it added.

(Editor's note: This news service is exclusive media partner to Highworth Research, a database of single-family offices around the world, giving unrivalled data about what SFOs are doing and where. Click here to register for a trial.)

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