By Andy Sambidge
Cross border investment from Middle East into Europe rises by 25%, says new Colliers report
Middle East investment in Europe rose by 25 percent year-on-year in the first half of 2014 to €5.9 billion ($7.9 billion), while the total cross border investment in Europe rose by nearly a third to top €44 billion, according to a new report.
Middle East capital accounted for approximately 13 percent of cross border capital coming from outside of Europe and was the second largest investment group into Europe following North America (€18 billion).
While Central London continued to dominate, now paying sub-5 percent yields, Colliers' Capital Flows Quarterly Report also highlighted growing interest in continental Europe.
John D Davis, CEO, Middle East & North Africa at Colliers International, said: "Middle Eastern buyers are increasingly prepared to venture outside Central London, looking at alternative asset classes such as hotels and serviced apartments in other tier 1 cities."
Recent examples include Qatar Investment Authority's acquisition of five more properties to its hotel portfolio, located in Cannes, Madrid, Frankfurt, Amsterdam and Rome, while Qatar Armed Forces Investment Portfolio acquired the Hotel Renaissance in Barcelona for approximately €78 million.
Davis added: "We have also seen Middle East investors play a key role in major deals in Central London during H1 2014, for example China Life and Qatar Investment Authority taking a 90 percent interest in Clifford Chance HQ in Canary Wharf."
The report also showed that Canadian investors are increasingly active in continental Europe, together with Australian funds and Sovereign Wealth Funds (SWFs) like NBIM and Kuwait Investment Authority eyeing European expansion.
According to Colliers, there has also been growing foreign interest in Dutch residential, while German investors cement their presence in Amsterdam CBD. Transaction volumes in The Netherlands reached nearly €4 billion in H1 alone (up 70 percent year-on-year), of which €2.4 billion was cross border capital.
Bruno Berretta, senior research analyst for EMEA at Colliers International, said: "Spain has also seen a pleasing revival in transactions as investors widen their focus to retail and development opportunities. Cross border investment in Spain reached €2.3 billion in H1 2014, up from €780 million a year ago."