Middle East investors to spend €14b on real estate annually, says CBRE

Investors in the Middle east will pump an average of $15 bn (€14 bn) per year into direct real estate globally in the near term, according to research by CBRE.

The Middle East continues to be one of the most important sources of cross-regional capital into the global real estate market, with $14 bn invested outside of the home region in 2014 — the third-largest source of capital globally.

Qatar, driven by its sovereign wealth funds (SWFs), was by far the largest source of outbound capital with $4.9 bn invested. Saudi Arabia has emerged as a significant new source of capital globally, investing $2.3 bn in 2014, up from almost no reported investment in 2013, CBRE said.

The Middle Eastern investor base has expanded, fuelled by weakening oil prices; this has led to a major shift in global investment strategies towards greater geographic and sector diversification, with activity spreading across gateway markets to second-tier locations in Europe and the Americas.

A greater proportion of Middle Eastern capital is now targeting the US - the $5 bn invested globally in Q1 2015 was almost equally split between Europe and the Americas, with New York, Washington DC, Los Angeles, and Atlanta targeted. London, while retaining the top position, is no longer as dominant, with a 32% share of all Middle East outbound investment in 2014, compared to 45% in 2013.

'The Middle East will remain one of the most important sources of cross-regional capital in the global real estate market,' said Iryna Pylypchuk, head of global research at CBRE.

'Recent signs that the Middle Eastern investor base is maturing and becoming more complex in nature are a healthy attribute not only in the context of global real estate, but also for the development of local markets in the Middle East.

'However, as a significant proportion of wealth accumulated in the Middle East will continue to be natural resource driven, diversification, and global diversification in particular, will be the key to Middle Eastern investors’ future strategies,' Pylypchuk added.

Click here for a PDF of the report on Middle Eastern capital inflows and outflows into real estate