Business | Property
Middle East investors set to snap up prime real estate in Europe
As pricing corrections hit western markets hard, Middle Eastern investors, including Dubai, look set to reap the rewards of prime commercial space in key European cities, according to officials at property consultants, Colliers International.
- By Suzanne Fenton, Staff Reporter
- Published: 23:37 June 30, 2008
Dubai: As pricing corrections hit western markets hard, Middle Eastern investors, including Dubai, look set to reap the rewards of prime commercial space in key European cities, according to officials at property consultants, Colliers International.
Eamon Alashkar, head of capital investment at Colliers Middle East, said that because of the effect the credit crunch has had in the US and Europe, now is the time for Middle East institutional investment.
"Now is the time to invest in mature western markets, like London's West End and in the City at extremely good prices.
"We can get aggressive. We, as Middle Eastern investors, don't have to wait," Alashkar said.
London's real estate market depends on capital growth rather than Dubai's well known cash-on-cash basis.
Finance
Alashkar said that Middle Easterners have financing readily available to them, making them highly attractive investors in a worldwide sphere.
Initial yields for commercial space in London are currently around six per cent. Market sentiment suggests that this will increase to around 6.25 per cent or even 6.5 per cent over the next three to six months, which is "not bad for prime London real estate", said Alashkar.
A recent report, issued by international property advisor, Savils European research agreed that pricing corrections in European investment markets will generate increased interest from Middle East investors.
The report suggests that investor demand for office rental growth will be sustained, although transaction volumes will be lower as debt-driven investors will not be as active in 2008 as they were in previous years.
"Although the price corrections appear to be rationalising, we believe there will be considerable opportunities in the coming 12 months. As the general economic slow-down in Europe continues, particularly in the United Kingdom, there has been a further outward shift of yields. The equivalent yields suggest we are back at early 2005 pricing levels," said Andrew Chambers, managing director of Asteco.
According to the report, the two locations in Europe with the strongest softening of prime CBD office yields, were both in London, one in the West End and the other in the City of London.
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