As cash-strapped governments in Europe turn to selling prized real estate assets, buyers from the Middle East and other emerging markets are acquiring trophy properties.
On March 31, Greece’s Hellenic Republic Asset Development Fund — set up with the sole mission “to maximise the value to the Hellenic Republic from the development and/or sale of assets” — named Lamda Development its preferred investor, with a €915-million (about Dh4.6 billion) bid, backed by Abu Dhabi’s Al Maabar and China’s Fosun International, for the acquisition of the share capital of the former Hellenikon airport site in Athens. The site is dubbed Europe’s largest unused tract of urban real estate.
Mark McFarland, Global Chief Economist, Coutts & Co, tells GN Prime, “Many countries in Europe and, increasingly, across the G7 [Canada, France, Germany, Italy, Japan, the UK and the US] have to sell assets to expect to balance their books.”
According to a recent CBRE report, Middle Eastern buyers for high-value real estate assets comprise institutional capital, including sovereign wealth funds (SWFs), and private capital.
Al Maabar, whose shareholders include Abu Dhabi’s sovereign wealth fund Mubadala, has mixed-used real estate developments across the Mena region, with projects including The St Regis in Amman, Jordan.
McFarland says that SWFs still tend to put a majority of their money into financial assets because they are liquid. “But there may be a move on the margins to buy more non-financial assets because they offer a high yield. Financial assets are giving you a lower yield now.”
As more assets are released, more such transactions may be on the cards. James Wyatt, Partner at London-based estate agent Barton Wyatt, says, “Demand from the Middle East in trophy assets has increased in recent years.
Perhaps the difference between North American or European investors and Middle Eastern investors is the speed of return on their money. Middle Eastern buyers will take the long-term view, whereas the others will look for short- term gain.”
