DOHA: Qatar was the largest source of Middle East’s capital outflow into the global real estate sector last year. Driven by its Sovereign Wealth Fund (SWF), Qatar invested $4.9bn in international commercial real estate sector.
Saudi Arabia has emerged as a significant new source of capital. From almost nothing reported in 2013, Saudi Arabian investors spent $2.3bn on international commercial real estate in 2014, according to the latest research from global property advisor CBRE Group.
London remained the main beneficiary of the Middle East’s capital outflow in the real estate sector last year.
But while retaining the top spot, London was no longer as dominant, with a 32 percent share of all Middle East outbound investments in 2014, compared with 45 percent in 2013.
The destinations of Middle Eastern capital in 2014 were increasingly diverse. The year 2015 saw the first signs that a greater proportion of Middle Eastern capital is targeting the US. In the first quarter of 2015, the $5bn invested globally was almost equally split between Europe and America, with Miami, New York and Washington featuring strongly.
The ‘bulkiness’ of many Middle Eastern investments are also shifting. Going forward, the American region is likely to see more capital inflow .
The research said Middle East continues to be one of the most important sources of cross-regional capital into the global real estate market. With $14bn invested outside of the home region in 2014, Middle East was the third largest source of capital globally. However, weaker oil price is becoming a pressing issue. Overall, 2014 saw a slight dip in outbound capital from the Middle East-from $16.3bn in 2013 to $14.1bn in 2014.
“There is no doubt that Middle east will remain one of the most important sources of cross-regional capital in the in the global real estate market. The weakening of oil prices, while being a negative event, has brought some positives, with it too. First and foremost, it has triggered a widening in the Middle eastern investor base and a more pronounced need for international diversification”, the research said
The CBRE analysis also noted that the sector preferences of the Middle East investors will also grow more divers, going forward. Offices will remain the largest sector, but investments in hotels will continue to grow. Hotel acquisitions are already in the second position, but are likely to feature even more in the next 12-18 months.
Looking ahead , the CBRE expects SWFs from the Middle east to remain important market-makers in global commercial real estate. It is very unlikely that the SWFs will make decisions to affect the existing capital allocations, the CBRE report said.
