The outbound capital flows resulted from global commercial real estate has recorded $ 10 billion in the first half (H1) of 2016, according to CBRE’s report, reported Trade Arabia.
Although there was a decline in global investment in H1 2016, Middle Eastern investors have remained active buyers according to the report under the name “In and Out”.
The report also stated that since 2009 , Middle East investments has increased faster than the market and faster than cross-regional investment. The increase was a result of Sovereign Wealth Funds (SWF) especially those coming from Qatar and UAE.
Middle East investments are expected to stay high as SWFs increase the weighting of their portfolios and include more real estate projects.
The investments took place often in New York as a top destination as it recorded $ 6.5 billion worth of investments during 18 months; London has witnessed investments worth of $ 4.7 billion, Singapore witnessed $ 2.5 billion, Hong Kong witnessed $ 2.4 billion, Paris witnessed $ 2.2 billion, and Milan witnessed $ 1.3 billion worth of investments from the Middle East.
The report also stated that SWFs have increased their distribution to real estate and family offices and high net worth individuals that increased overseas, achieving diversity.
The Middle East has witnessed cross-regional investment in the world’s 25 most popular cities in foreign countries between year 2008 and the first half of 2016, stated Gulf Business.
A factor that is affecting Middle Eastern investment is diversification by asset type; the office sector witnessed the most investments between 2010 and 2014 recording total of 53% and 17% in the hotel sector.
The report also stated that in 2015 hotels and offices recorded purchases of $ 8.2 billion in each sector; while the industrial sector witnessed an increase of 9% compared to the 3% made over the past five years.
Investors’ focus is being influenced by market’s structural challenges along with limited commercial investment that is driven by the underdeveloped nature of the market and the unwillingness on behalf of owners to part with prime assets.