UAE Investors Spend 4.3bn EUR on Overseas Property in H1 2015

High net worth individuals (HNWIs) and private investors in the UAE spent ?4.3bn snapping up properties across the world in the first half 2015, according to CBRE.

"Despite low oil prices, Middle Eastern purchasers remain very active, collectively investing ?10.8bn outside their home markets in first half 2015. Almost ?4.9bn and ?4.3bn flowed out of Qatar and UAE respectively into direct real estate globally during the period," the property consultancy said in a report.

Nick Maclean, Managing Director, CBRE Middle East, said: "Data from H1 2015 shows a continuing acceleration in the flow of capital out of Middle East region by private offices and HNWIs. This, to some extent, is compensating for a decline in sovereign wealth capital going overseas, naturally perhaps as a consequence of reduced revenue allocations because of recent oil re-pricing. The interest in overseas investments, particularly from the UAE, is also being influenced by some uncertainties in local real estate markets".

Global commercial real estate investment reached ?3.8bn in the first half 2015, the strongest first half of a year since 2007, and up 14 per cent year-over-year.

Although rapid growth has been maintained for several years, the rate of growth slowed during the said period and was vastly different at a regional and country level. The Americas experienced growth of 31% year-on-year, while a strong dollar impacted activity in EMEA (Europe, Middle East & Africa) and Asia Pacific (APAC). In dollar terms, EMEA was up just 5 per cent from H1 2014, with APAC down 19% year-on-year. When measured in local currency EMEA grew by 25%, while a decline in APAC was more muted at 9% year-on-year.

While recent activity was boosted by a few large sovereign wealth fund deals, the investor base is growing and so is their investment strategy towards greater geographic and sector diversification, with activity spreading beyond gateway markets to second-tier locations in Europe and the Americas, and more recently towards Asia Pacific.

Cross-border investors have grown in influence to become an important driver of commercial real estate investment globally, particularly in the last 24 months, and are changing the shape of the market. The world’s leading destinations, in terms of global capital flows, is a balanced mix of cities across all main regions—London was the most targeted city by cross-border investors in H1 2015, followed by New York and Paris.

This contrasts with the top destinations for overall investment where the bias is strongly on the US—New York was the leading city overall, followed by London and Los Angeles, the report said.

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