Dubai: UAE and Gulf investors with funds to spare have never been short of options when it comes to real estate. When not committing substantial investments on land or property development within the region, they pick and choose assets across a wide geography, with Europe a steadfast favourite.

Now, with the euro’s steady softening, are they likely to ratchet up their presence further across the continent?

“If a particular region or market is already within an investor’s target zone, it obviously makes sense to time investments to generate more returns — especially if you take in to account that in the longer term some sort of recovery in the currency may be expected,” said Michael Haddock, senior director responsible for Europe, Middle East and Africa Research and Consulting at CBRE.

Even last year, Middle East investors did have a good time of it in picking up European assets. While residential property continues to dominate these buys, interest in commercial has also been picking up.

Historically, offices have accounted for 50 per cent of commercial real estate picked up by Middle East investors, while retail and hotels follow with 15 and 14 per cent of the share.

“Last year was very much in line with this trend,” said Haddock. “It should be said that hotels make up only 6 per cent of the European market over the last decade... so this [Middle East buyers’ choice] represents quite a strong bias in favour of hotels relative to the overall market.”

Early this year, Royal Gulf Ltd, part of Select Group, confirmed it had bought the fully operational Radisson Blu Hotel in Birmingham. The decision to was “based on compelling financial rationale, an early mover advantage into a major city and its ability to cater for a broad range of guest needs including leisure and business travellers,” the company had said in a statement.

This followed an earlier purchase made last year of ‘South Reef’, a £50 million (Dh271.8 million) mixed-use development which had gone into administration after funding issues. The Select Group then relaunched construction and the project — since renamed ‘Nottingham One’ — is complete.

Outside of offices and hotels, Gulf-based investors are also showing keenness in European logistics assets and “increasing Sharia-funded vehicles looking into the European student and multi-family housing sectors,” said Simon Townsend, head of Capital Markets at DTZ, the consultancy.

“It is also becoming evident that many of the closed-ended European and US funds that bought assets in late 2010 will be considering liquidating these in the next 12 months, [thus] increasing the investable stock across many of the key markets.

“We are already seeing interest in non-core European markets such as Poland where the return dynamics tend to be more attractive as opposed to say UK or France. Across the region there has been increased interest in Spain where the recovery story is gaining momentum, especially in the semi-prime office and 4/5-star hotel sectors.”

Property values in the Eurozone have been trending higher for the better part of the last 24-36 months, while in London rates have already gone through the roof and had time to cool off a bit.

But there are still plenty of options in Europe for those investors who want to come in at a value that can still offer upward mobility.

“There is still a substantial yield gap between prime and secondary property that makes the latter look attractive to those investors who feel prime is now fully priced,” said Haddock.

“This is still true in the UK, despite the substantial re-pricing that its secondary market has undergone over the last year or so. However, the spread between prime and secondary is particularly marked in continental Europe,” he added.

“It is important to note the premium real estate in continental Europe offers in terms of yield over bonds — and also the cost of finance — is at a very high level by historic standards. For investors taking this cross-sectional view, the case for core real estate remains relatively strong.”