Insatiable Istithmar Plays High-Low in New York City

When asked about the series of recent New York acquisitions, Mr. Jackson said it didn’t reflect any particular strategy. “We just don’t look at our investments in terms of geography,” he said.

And Istithmar’s acquisitions, though particularly glittering, are also part of a broader trend. The weak dollar has made New York an attractive target for all sorts of global shoppers, driving the price of commercial real estate, including hotels, to new highs, a trend that seems to have purged the legendary cautionary tale of Mitsubishi’s disastrous 1989 purchase of Rockefeller Center.

Those investments have also, for the past decade, been a source of tantalizing returns.

“The Germans bought in the late 90’s, and [since 2000] the Irish have been investing in New York; they made a fortune,” said Douglas Harmon of the investment-sales firm Eastil Secured, which arranged the Knickerbocker sale for seller Sitt Asset Management. “The Greek shipping magnates have made fortunes, the English, the Israelis—even Istithmar. Everybody said, ‘That’s gotta be the last stop on the train,’ but they weren’t stupid. They were taking their oil money and diversifying their investments.”

Istithmar is hardly the only Arab investor in New York City recently. Saudi-backed Kingdom Holding Company has a piece of the Plaza. The Sultan of Brunei owns the New York Palace. The Dubai Investment Group, not associated with Istithmar, owns the Jumeirah Essex House, a luxury hotel on Central Park South.

“When Mandarin announced that hotel [deal], everyone thought they were nuts,” said John Bralower, a hotel specialist at Carlton Advisory Services. “[Istithmar] has looked pretty smart so far—they paid high prices, but it looks like they were worth it.”

Ben Smith is a former staff writer at The Observer. He writes for Politico.com. He can be reached at bsmith@observer.com.