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Thu 12 Apr 2007 11:27 AM

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Gulf funds pump $13bn into property

About 5% of the GCC's petrodollar-inflated current account surpluses was invested in global real estate last year.

Gulf Arab countries invested $13bn in global real estate in 2006, up 14% on the year before, according to research by Jones Lang LaSalle.

The figure equates to roughly 5% of the region's petrodollar-inflated current account surpluses.

Over half of this $13bn was invested in the US, followed by the UK ($4bn), Germany ($1bn) and South Africa ($1bn). Major investments were also made in France and Sweden.

Tony Horrell, CEO of Jones Lang LaSalle's International Capital Group commented: "GCC funds are focusing less on trophy assets and are making significant purchases in emerging markets, including the [a stake in South Africa's] Cape Town waterfront development and Europe's largest shopping centre in Istanbul. As well as looking for opportunities in emerging markets, GCC funds are also looking for value added opportunities."

GCC funds also traded significantly more assets than previously, selling $2bn of real estate in both the US and the UK, up 50% on 2005.

Middle Eastern economies remain buoyed by sustained high energy price levels and are estimated to achieve current account surpluses approaching $260bn in 2007.

Padraig Brown, Global Strategy and Research Director at Jones Lang LaSalle said: "Gulf economies are now voracious real estate investors. Funds are currently investing 5% of the regions' current account surpluses in global real estate markets. This is in addition to funding almost 25% of global development activity which is occurring in their home markets, and significant flows into indirect real estate funds."

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