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Middle East Gulf News

Courtesy post via the Wall Street Journal

By: NICOLAS PARASIE
June 16, 2014
Wall Street Journal

CBRE: Middle East SWFs To Spend $180 Billion on Real Estate Abroad

Middle Eastern investors led by the region’s sovereign wealth funds are likely to pour an additional $180 billion in commercial real estate around the globe in the next decade alone, according to property consulting and research firm CBRE.

The cash-rich funds, already among the most active buyers of property in London or Paris, are looking to deploy their vast resources outside their domestic markets where the real estate industry remains under-developed.

“Since the global financial crisis, SWFs from the Middle East have become one of the most significant sources of capital in the global real estate landscape,” said Nick Maclean, managing director of CBRE Middle East.

“This trend is set to continue and with new sources of Middle Eastern capital, particularly from Saudi, set to enter the market over the next couple of years, the demand for real estate is increasing strongly,” he said.

CBRE says nearly half of Middle Eastern money alone will likely be spent on U.K. property, continuing existing trends. Here are some key takeaways:

Mideast investors are expected to spend $180 billion in commercial real estate outside their domestic markets in the next 10 years.

Around $145 billion of Mideast money will target Europe, of which $85 billion will flow into the U.K. and the rest into France, Germany, Italy and Spain.

During 2012 and 2013, London accounted for close to 44% of real estate deals followed by Paris and Milan.

In 2013, Mideast investors spent $13 billion on real estate abroad compared to $8 billion in 2007 and $2 billion during the financial crisis in 2009.

Only 10% of expected Mideast investments will go into the U.S. real estate market as investors diversify away from dollar-denominated assets.

Between 2007 and 2013, Mideast investors spent $45 billion on real estate abroad, seven times the reported activity at home.

 

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