Dubai
Middle East investors took some time off buying overseas commercial property in 2017, with estimates putting a value of $9.1 billion (Dh33.4 billion) compared with $12.2 billion a year before that. Obviously, the low oil prices during the better part of 2017 was a factor in curbing buyer appetite.
Plus, there was increased competition from other buyers who chase exposures in “global gateway cities which for long have been a preferred target location”, according to JLL, the real estate consultancy. ”However, Middle Eastern buyers are expected to regain their competitiveness and dive deeper into established real estate markets of continental Europe, contributing to the recovery of outbound investment volumes in the future.”
Plus, private investors are “increasingly concerned with geopolitical situations and continue to export their capital overseas”. And the introduction of Reits (real estate investment trusts) in Saudi Arabia will lead to greater private participation in financing of real estate and increased overseas flows, the report said.
Even on oil prices, things are running in their favour, having inched up above $70 a barrel for the first time since 2014. “Sovereign wealth funds (SWFs) are taking a more active management approach to their real estate stock,” the report adds. “Their activity is expected to pick up although for country-specific reasons some will be more active than others.”
Middle East investors are also willing to look beyond trophy office buildings or even hotels. These days they are as likely to opt for “student housing, hospitals and senior housing”.
“This change in mentality suggests that in their permanent quest for higher yield, investors are now more willing to move up the risk curve,” said Fadi Moussalli, Head of International Capital Group, MENA at JLL. (Historically, offices and hotels have accounted for 85 per cent of commercial real estate investment flows from the region each year.)
