Mideast Real Estate Investment Reaches Record

More than $11 billion flowed into real estate globally from the Middle East during the first half of 2015, surpassing 2007’s high of $9.6 billion, reported CBRE Group, Los Angeles. 

The $11.5 billion half-year figure approaches last year’s full-year Middle East outbound investment of $13.8 billion. “For 2015 as a whole, we expect Middle Eastern capital flows into the Americas to break the $5.1 billion high mark recorded in 2007,” said CBRE Americas Head of Research Spencer Levy. 

Levy said types and locations of assets purchased with Middle Eastern capital expanded because funds available as well as its diverse sources from institutional to private buyers. “We expect this appetite to continue to broaden as the supply-demand imbalances in the major markets and traditional asset types are not expected to abate in the near future,” he said. 

CBRE found a shift toward the Americas by Middle Eastern buyers in the first half of 2015, with $2.7 billion invested in the region already on track to surpass the long-term historic annual average. In addition to New York, Washington, D.C., Atlanta and Miami were featured among the top 20 investment hot spots for Middle Eastern buyers in H1 2015, the firm said. 

Middle Eastern investors have become active across a wider range of sectors, said CBRE Director of Global Research Iryna Pylypchuk. In the last year, the hotel sector grew in importance for global investors and continues to attract foreign capital. Outbound investments in hotels totaled $6.8 billion in the first half of the year, a major leap compared to $1.8 billion for 2014 overall. 

Middle East sovereign wealth funds increased their outbound investment during the first half despite dramatically weakening oil prices, CBRE said. Sovereign wealth fund spending reached $8.3 billion, representing more than 72 percent of total investment. 

“Over the last year and a half, we have seen a general broadening of location and sector selection in the outbound strategies of Middle East investors,” Pylypchuk said. “From being mainly European/London office-centric buyers, they are now emerging with truly diverse strategies, so much so that the balance has shifted to almost 50 percent of new acquisitions taking place outside of Europe during the first half of 2015.”