Tumbling oil prices in the first six months of this year did little to dampen Middle Eastern appetite for international real estate with outbound investment reaching a historic high. During the first half of this year, €10.11 bln (US$11.5 bln) of capital flowed out of the Middle East into real estate globally – nearly reaching the €12.13 bln ($13.8 bln) reported for the entirety of last year.
According to figures published in September of 2015 by the property broker CBRE, London remained the main beneficiary of investment, receiving €2.46 bln ($2.8 bln) and representing 24% of all Middle Eastern international investment. Hong Kong came in second with €2.11 bln ($2.4 bln), followed by New York with €967 mln ($1.1 bln) key London deals reported during the period including Qatar Investment Authority’s €2.17 bln ($2.47 bln) acquisition of a majority stake in three top London hotels - Claridge’s, The Berkeley and The Connaught - all operating under the Maybourne Hotel Group.
Whilst investments from the Middle East have covered a diverse sector mix, hotels have by far topped the table as investors look to target assets that will generate long term revenue.
According to another recent report issued by Savills, commercial real estate investments in Europe are at an all-time high since 2007. The report entitled ‘European Investment Briefing’, suggests that the first half of the year proved to be a good period for the European commercial real estate industry. Investment volumes rose to its highest levels since 2007, which amounted to €102.5 bln (approx. $115 bln) and marked a 25% increase on the same period last year.
Sixteen countries participated in the report, including the United Kingdom, France, Portugal, Spain, Austria and Italy amongst others. The report indicated that the European market is on track to surpass the €230 bln (approx. $258 bln) target set for the year. Lydia Brissy, director at Savills' European Research Team stated "Investors also favoured core markets in Europe wherein UK, Germany and France accounted for 67.8% of the total volume”.
Here Savills found that the office sector continued to dominate the investment activity in most countries across Europe, capturing about 39% of the transaction volume per country on average. The only exceptions where retail properties accounted for a higher share of property investment deals were Germany (42%), Finland (43%), Netherlands (43%), Norway (62%) and Portugal (83%), which saw the sale of large-scale retail portfolios in the past quarter.
Source: IRE 2015
