Middle Eastern investors are set to spend $180 billion on commercial real estate
New research shows that Middle Eastern investors will shell out $180 billion on commercial real estate worldwide over the next 10 years. Paris will be one of the key targets.
The region’s sovereign wealth funds are particularly active buyers of property, mainly in London and Paris. They are seeking to invest outside their domestic markets, where supply struggles to keep pace with demand. This will continue the significant outflow of capital in recent years. Middle Eastern sovereign funds already have almost $175 billion in property holdings globally, around 8% of their total assets.
In 2013, Middle Eastern investors spent $13 billion on foreign commercial real estate, an increase of almost 75% over the previous year ($7.5 billion). Spending had dipped to $2 billion during the 2009 global financial crisis but has been rising steadily since then.
The research shows that offices, retail stores and hotels head the shopping list. Investors are targeting wealth preservation and high income-producing assets over the long term.
London is the prime target, followed by Paris, which accounted for 15% of Middle Eastern investors’ spending in 2012-13. They are expected to spend around $145 billion in Europe over the next decade, mainly in the U.K., France, Germany, Italy and Spain.