London is top beneficiary as Middle East investments in global real estate at new high

Tumbling oil prices in the first six months of this year did little to dampen Middle Eastern appetite for international real estate with outbound investment reaching a historic high.

During the first half of this year, US$11.5 billion of capital flowed out of the Middle East into real estate globally – nearly reaching the $13.8bn reported for the entirety of last year.

According to figures published yesterday by the property broker CBRE, London remained the main beneficiary of investment, receiving $2.8bn and representing 24 per cent of all Middle Eastern international investment.

Hong Kong came in second with $2.4bn, followed by New York with $1.1bn.

Key London deals reported during the period included Qatar Investment Authority’s $2.47bn acquisition of a majority stake in three top London hotels – Claridge’s, The Berkeley and The Connaught.

Sovereign wealth funds were some of the biggest spenders during the period, spending a total of $8.3bn – more than 72 per cent of total spending.

Qatar was the biggest spender, with Qatari sovereign wealth funds investing a total of $9.83bn on international property over the period.

Meanwhile, the UAE invested $6.64bn in global assets during last year and the first half of this year combined, CBRE said.

“The size of the region’s foreign investment makes the Middle East the third-largest source of cross regional capital globally as Arab investors look for brighter investment prospects internationally,” said Nick Maclean, the managing director of CBRE Middle East.

Researchers added that the types of property bought by Middle Eastern investors were also moving away from the traditional assets of prominent trophy buildings and high-profile office blocks.

CBRE said that hotels accounted for $6.8bn in the first half of 2015 – more than three times the $1.8bn reported for last year as a whole.

The news came during the second day of the Cityscape Global property exhibition in Dubai yesterday.

“The domestic market is a curate’s egg – good in parts,” Mr Maclean said.

“The commercial market is still showing strong demand and for the office occupiers we deal with, it is still the case that there is strong international demand,” he said.

“However, for the residential market we are seeing a number of programmes that are not being exhibited this year because they are in the process of being redesigned to make them more appropriate for current market conditions,” Mr Maclean added.

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