Middle Eastern capital pours into real estate, CBRE study shows

Middle Eastern capital sources will commit an average $15bn (€13.7bn) a year to direct property investment outside the region in the near term.

Research from CBRE found that London was the top destination for Middle Eastern capital, with $4.4bn of flows into the city accounting for 32% of all Middle Eastern outbound investment in 2014.

The $5bn that Middle Eastern sources invested globally in property in the first quarter of this year was split almost equally between Europe and the Americas.

Paris was the second-largest market last year.

CBRE said the range of Middle Eastern investors had also widened.

Sovereign wealth funds remain the largest source of capital, led by Qatar’s SWF, which invested $4.9bn outside the region last year.

Saudi Arabia emerged as a significant new source of capital globally, investing $2.3bn, up from almost no reported investment in 2013.

Middle Eastern high-net-worth investors and private property companies and developers began increasing their allocations outside the region last year as well.

“This has had a particularly significant impact on Europe, where their combined real estate investments grew by 56% year on year to €4.4bn,” CBRE said.

Private capital from sources other than traditional Middle Eastern institutions accounted for nearly 60% of total Middle Eastern investment in Europe.

The EU hotel sector remains a top destination for both sovereign wealth funds and private investors.

In addition to trophy hotel assets in London and Paris, Middle Eastern investors are now targeting Central and Eastern Europe, and entering new segments such as mid-market hotels next to major airports.