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Sat 21 Nov 2015 01:48 AM

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Gulf buyers invest $11.5bn in H1 global office market despite cheap oil

CBRE Group says $5.24bn and $4.54bn flow out of Qatar and UAE respectively in first six months of the year

Gulf buyers invest $11.5bn in H1 global office market despite cheap oil
London was the most targeted city by cross-border commercial real estate investors in H1,

Middle East buyers remained very active in the global commercial real estate investment market during the first half of 2015 despite the impact of low oil prices, a new report has said.

Purchasers from the region collectively invested $11.5 billion outside their home markets in the first six months of the year as global investment reached $407 billion, the strongest first half of a year since 2007, and up 14 per cent year-over-year.

The latest research from property advisor CBRE Group said $5.24 billion and $4.54 billion flowed out of Qatar and UAE.

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 core Asia Pacific, CBRE said. 

Its report added that although rapid growth has been maintained for several years, the rate of growth slowed in H1 and was vastly different at a regional and country level.

The Americas experienced growth of 31 percent year-over-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 percent from H1 2014, with APAC down 19 percent year-over-year.

“Data from H1 2015 shows a continuing acceleration in the flow of capital out of Middle East region by private offices and high-net-worth-individuals. 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 repricing. The interest in overseas investments, particularly from the UAE, is also being influenced by some uncertainties in the local real estate markets,” said Nick Maclean, managing director, CBRE Middle East.

The report said cross-border investors have grown in influence to become an important driver of CRE 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, followed by New York and Paris.

At a regional level, the influence of global investors varies from as little as 10 percent in the Americas, to almost 50 percent of the market in EMEA.

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