MIDDLE EAST OUTBOUND INVESTMENT REACHES AN HISTORIC HIGH IN H1 2015

During the first half of 2015, US$11.5 billion of capital flowed out of the Middle East into direct real estate globally, according to the latest research from global property advisor CBRE Group, Inc. Total Middle East outbound investment during 2014 stood at US$13.8 billion. 

London remained the main beneficiary of investment during the first half of 2015, receiving US$ 2.8 billion and representing 24 per cent of Middle Eastern outbound capital. Notable deals included the US$2.47 billion Qatar Investment Authority’s acquisition of Maybourne Hotels and the US$110 million purchase of the London Midtown office by a private investor. Hong Kong came in second with US$2.4 billion, followed by New York with US$1.1 billion.

Despite weakening oil prices, acquisitions by sovereign wealth funds increased during H1 2015. Sovereign spending stood at US$8.3 billion, representing more than 72 per cent of total spend. However, the H1 2015 results were boosted by two large hotel acquisitions at US$2.5 and US$2.4 billion each – one in London and the other in Hong Kong, by two different SWFs.

Nick Maclean, Managing Director, CBRE Middle East, said, “The size of the region’s foreign investment makes the Middle East the third-largest source of cross regional capital globally as Arab investors look for brighter investment prospects internationally. Qatar remains the largest source of outbound capital investing a total of US$9.834 billion, while the UAE invested US$6.64 billion in global assets during the 2014 and the first half of 2015 combined.”

Middle Eastern investors are becoming more active across a wider range of sectors. The hospitality industry shows an upward trajectory and a much greater sense of optimism. Their outbound investments in hotels totaled US$6.8 billion in the first half of 2015; a gigantic leap compared to US$ 1.8 billion for 2014 as a whole. In the last year or so, the hospitality sector has really grown in importance on global investors’ radar and continues to attract large inflows of foreign capital.

“Real estate investors from the Middle East continue to play a very important role across a broader selection of global real estate markets. Recent acquisitions in AsiaPac – with close to US$3 billion invested in Hong Kong and Sydney in H1 2015 alone - as well as a broader selection of markets invested in Europe showcase the on-going evolution of their investment strategies. This extends to sector selection, with hotels growing in importance recently as sovereign wealth funds and high-net-worth individuals focus on real assets that generate long-term revenue,” said Iryna Pylypchuk, Global Research, CBRE.