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Tue 2 Jul 2013 09:18 AM

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Third of investors plan to decrease MidEast exposure

Arab Spring has affected investor confidence, with only 13% planning further investment - report

Third of investors plan to decrease MidEast exposure

Nearly a third of international real estate investors said they plan to decrease their exposure to the Middle East over the next five years, with the UK increasingly seen as a safe haven for funds, according to new research.

A new report commissioned by London-based law firm Nabarro surveyed over 600 global real estate investors, occupiers and advisors on their short, medium and long-term investment plans.

The results found 13 percent said they plan to increase their exposure to the Middle East over the next five years. However, interest in the region is most likely to drop, with a third of investors saying that the attractiveness of the Middle East will decrease in the future.

“The Arab Spring has affected investor confidence in the Middle East with some institutional investors withdrawing from the region due to perceived concerns around risk,” said Ciaran Carvalho, head of real estate at Nabarro.

“However, there are regions within the Middle East that are experiencing a revival. Dubai’s residential sector remains on a positive growth track as sales rates and rents continue to increase... Confidence remains reasonably buoyant in Qatar and the UAE with significant demand for residential and non residential opportunities which in 2012 totalled in the region of $48bn,” he added.

Investment flow in the other direction is predicted to remain strong, with three quarters of investors into the UK coming from the Middle East.

However, investors did have some concerns about investing in the UK. Britain exiting from the EU was cited as a key deterrent by 55 percent of occupiers, whilst 29 percent of investors felt that the tax regime and planning laws were responsible for less investment coming into the country.

More specific concerns from Indian occupiers related to the UK tightening its immigration policy. Nearly 70 percent of Indian occupiers surveyed were worried about this and feel less confident about both locating their business operations and investing in the UK.

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