Middle Eastern investors to plough $145bn into European real estate

Middle Eastern investors are tipped to spend $145bn on European commercial real estate in the next decade.

CBRE predicts that $180bn will be spent on commercial real estate by Middle Eastern investors in the next 10 years.

CBRE estimates that 80% ($145bn) will target Europe, with $60bn directed at continental Europe.

France, Germany, Italy and Spain are among key target markets, the advisory said. Close to $85bn could flow into the UK.

An “extraordinary mismatch” between a lack of institutional real estate in Middle Eastern markets and huge spending power in the region are behind the outflows, CBRE said, estimating that in the last two years $20bn had been invested outside the Middle East. That compares with $45bn between 2007 and last year.

The Middle East’s Sovereign Wealth Funds (SWFs) now account for 35% of SWFs assets under management globally.

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

“The demand from these institutions has evolved during the last few years into a sophisticated source of liquidity for many of the mature real estate markets around the world.”

New sources of Middle Eastern capital, particularly from Saudi Arabia, are set to enter the market over the next couple of years, Maclean said.

“The importance of this region on the global investment stage cannot be understated,” he said.

Last year, close to 90% of all Middle Eastern commercial real estate investment outside of the home region was in Europe.