{"id":4436,"date":"2016-02-11T22:43:11","date_gmt":"2016-02-11T15:43:11","guid":{"rendered":"http:\/\/www.siamlandbank.com\/propertynews\/?p=4436"},"modified":"2016-02-11T20:07:01","modified_gmt":"2016-02-11T13:07:01","slug":"middle-east-investors-remain-active-abroad-despite-sell-offs","status":"publish","type":"post","link":"https:\/\/www.siamlandbank.com\/propertynews\/property-news\/middle-east-investors-remain-active-abroad-despite-sell-offs\/","title":{"rendered":"Middle East investors remain active abroad, despite sell-offs"},"content":{"rendered":"


\n
\nThe weak oil price has pushed Middle East government budgets into significant deficits, with some starting to sell off assets to balance their finances. Middle Eastern investors have also been quite active in European real estate in recent years and the question is, would they also start to sell real estate assets as they had been doing with their more liquid assets, equities and money market funds, last year?
\nUntil 2014, Europe was the main destination for Middle Eastern capital. But several very large deals in Manhattan and involving a US industrial portfolio, both in 2015, have pushed the Americas ahead of Europe. While Middle Eastern investors have increased their investment activity in some continental European markets, investment volumes in their most favoured investment destination, London, were more muted.
\nClose to 50 per cent of Middle Eastern activity is still focused on London. Preliminary statistics suggest that the slowdown in investment activity in London led to decline of about 20 per sent of Middle Eastern investment activity in European commercial real estate. Even though this decline is significant, we do not expect a major effect on the overall European real estate market, although some sub-segments may be affected.
\nDuring the past few years, Middle Eastern capital contributed between 3 and 4 per cent of total European commercial real estate investment volumes. But sovereign wealth funds have been focusing on larger lot sizes, above \u20ac150 million (Dh623m), in the office sector – most notably in London and Paris but also in the major German cities of Berlin, Frankfurt and Munich – as well as in the hotel sector.
\nDespite many real estate professionals’ perception, data does not prove that Middle Eastern investors have pushed prime office yields down. In London, however, transactional yield evidence does suggest some decline over the past few years, but this is in line with the overall falling gilt rate environment. Recently, there is some, although anecdotal, evidence that several deals in London were cancelled as investors were not prepared to pay the asking price. It cannot be definitely confirmed if the falling oil price and a change in investor strategy were the reason behind the failure of the deals as investment activity in the rest of Europe continued.
\nUS dollar-denominated investments in the eurozone have become slightly more affordable following the devaluation of the euro, which was stronger than for the British pound. Furthermore the recovery of the eurozone commercial real estate market, in particular the occupier and rental cycle, is only at its early stages while the UK and, in particular, the London office market is at a more advanced stage. It makes sense for Middle Eastern investors to diversify their European investments outside the UK.
\nInvesting in US commercial real estate also makes sense from a currency perspective. Another hypothesis behind investor caution on London is the political discussion on the UK’s EU membership, which may influence future decisions. With the oil price unlikely to return to 2013 levels anytime soon, could the market expect a retreat of Middle Eastern capital from global real estate, in particular from Europe?
\nFirst of all, commercial real estate investment volume statistics show only part of the market, namely the direct commercial real estate investment market. The direct investment data is somewhat biased toward sovereign wealth funds and lower inflows from oil revenues could well influence their investment strategies. Middle Eastern investors, in particular wealthy people and smaller institutional investors, have also been investing indirectly into commercial real estate, which is more difficult to follow.
\n(Direct investments are direct purchases but could be joint ventures as well. Indirect investments are real estate investments in funds.) The Middle Eastern commercial real estate domestic markets offer only limited income-producing product. The search for yield from institutional and wealthy investors alike favours investing in commercial real estate, meaning increased demand for income producing assets in global markets.
\nThe current geopolitical environment in the Middle East is translating into an increased demand for global commercial real estate to meet investor needs for regional diversification but also increasing need for income return and wealth preservation. Lower oil revenues may also lead to investing in lower lot-sized real estate assets. This could broaden the investment scope of Middle Eastern investors, in particular in Europe, where lot sizes in the office and retail sector are mainly below \u20ac100m.
\nBut a more geographically diverse and lower lot-sized portfolio may challenge and stretch the current business set-up of some institutional investors in the region as a more granular portfolio is more management intensive than a handful of big assets in a limited number of locations. A consequence could be that Middle Eastern investors move more towards indirect investments or partnerships with regional and local managers or explore fund-of-funds strategies.
\nAs such public data for direct commercial real estate investment volumes may show a decline of Middle Eastern investor real estate investment activity in the future but might get shifted to the indirect market, which gets often quoted as “global” capital.Gunnar Herm is the head of real estate research and strategy at UBS.business@thenational.aeFollow The National’s Business section on Twitter
\n
\nSource : thenational.ae
\nRead more…Middle East investors remain active abroad, despite sell-offs<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

The weak oil price has pushed Middle East government budgets into significant deficits, with...<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"false","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"spay_email":"","footnotes":"","jetpack_publicize_message":"","jetpack_is_tweetstorm":false,"jetpack_publicize_feature_enabled":true},"categories":[1],"tags":[],"class_list":["post-4436","post","type-post","status-publish","format-standard","hentry","category-property-news"],"jetpack_featured_media_url":"","jetpack_publicize_connections":[],"jetpack_sharing_enabled":true,"jetpack_shortlink":"https:\/\/wp.me\/p75ss1-19y","jetpack-related-posts":[{"id":24150,"url":"https:\/\/www.siamlandbank.com\/propertynews\/property-news\/regions-wealthy-to-continue-diversification-into-overseas-property\/","url_meta":{"origin":4436,"position":0},"title":"Region's wealthy to continue diversification into overseas property","date":"August 27, 2016","format":false,"excerpt":"\r The price of oil may have fallen but Middle Eastern property investors are set to continue to pump billions of dirhams into big-name properties overseas, despite slowing global growth.Analysts predict that although property prices locally are falling, the amount of money raised by sovereign wealth funds, private companies and\u2026","rel":"","context":"In "Property News"","img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":35036,"url":"https:\/\/www.siamlandbank.com\/propertynews\/property-news\/us-still-of-interest-for-middle-east-real-estate-investors\/","url_meta":{"origin":4436,"position":1},"title":"US still of interest for Middle East real estate investors","date":"November 20, 2016","format":false,"excerpt":"\r Analysts are predicting that Middle East sovereign wealth funds will continue to buy big chunks of real estate in America's biggest cities despite Donald Trump's election victory. Over the past year, the funds, which have traditionally invested in high-profile London buildings such as the Shard and the Berkeley Square\u2026","rel":"","context":"In "Property News"","img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":24869,"url":"https:\/\/www.siamlandbank.com\/propertynews\/property-news\/middle-eastern-sovereign-funds-spend-less-in-overseas-commercial-property-investments\/","url_meta":{"origin":4436,"position":2},"title":"Middle Eastern sovereign funds spend less in overseas commercial property investments","date":"September 4, 2016","format":false,"excerpt":"\r The panic in financial markets, which followed Britain's shock Brexit vote and a slowdown in the Chinese economy, has prompted Middle Eastern sovereign wealth funds to rein in their spending on high profile overseas office blocks and hotels.The amount of money being spent by Middle Eastern sovereign wealth funds\u2026","rel":"","context":"In "Property News"","img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":24877,"url":"https:\/\/www.siamlandbank.com\/propertynews\/property-news\/middle-eastern-sovereign-funds-spend-less-on-overseas-commercial-property-investments\/","url_meta":{"origin":4436,"position":3},"title":"Middle Eastern sovereign funds spend less on overseas commercial property investments","date":"September 4, 2016","format":false,"excerpt":"\r The panic in financial markets, which followed Britain's shock Brexit vote and a slowdown in the Chinese economy, has prompted Middle Eastern sovereign wealth funds to rein in their spending on high-profile overseas office blocks and hotels.The amount of money being spent by Middle Eastern sovereign wealth funds and\u2026","rel":"","context":"In "Property News"","img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":14710,"url":"https:\/\/www.siamlandbank.com\/propertynews\/property-news\/another-year-another-record-for-asian-outbound-investment\/","url_meta":{"origin":4436,"position":4},"title":"Another year, another record for Asian outbound investment","date":"May 28, 2016","format":false,"excerpt":"\r Asia\u00a0renews its appetite for big real estate\u00a0deals Busan, South Korea (Image credit: Suitqaisdiaries.com) Once again, Asian investments in international property markets reached new heights. According to CBRE Research, Asian outbound investment topped USD62.4 billion in 2015, a 37 percent year-on-year increase from the record USD45.5 billion posted a year\u2026","rel":"","context":"In "Property News"","img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":23837,"url":"https:\/\/www.siamlandbank.com\/propertynews\/property-news\/qatar-investment-authority-buys-9-9-per-cent-stake-in-empire-state-building-owner\/","url_meta":{"origin":4436,"position":5},"title":"Qatar Investment Authority buys 9.9 per cent stake in Empire State Building owner","date":"August 24, 2016","format":false,"excerpt":"\r Qatar Investment Authority (QIA), the Middle Eastern country's sovereign wealth fund, bought a near 10 per cent interest in Empire State Realty Trust, owner of New York's Empire State Building, as it boosts investments in North America and the Asia Pacific region.The fund acquired 29.6 million newly issued Class\u2026","rel":"","context":"In "Property News"","img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]}],"_links":{"self":[{"href":"https:\/\/www.siamlandbank.com\/propertynews\/wp-json\/wp\/v2\/posts\/4436"}],"collection":[{"href":"https:\/\/www.siamlandbank.com\/propertynews\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.siamlandbank.com\/propertynews\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.siamlandbank.com\/propertynews\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.siamlandbank.com\/propertynews\/wp-json\/wp\/v2\/comments?post=4436"}],"version-history":[{"count":0,"href":"https:\/\/www.siamlandbank.com\/propertynews\/wp-json\/wp\/v2\/posts\/4436\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.siamlandbank.com\/propertynews\/wp-json\/wp\/v2\/media?parent=4436"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.siamlandbank.com\/propertynews\/wp-json\/wp\/v2\/categories?post=4436"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.siamlandbank.com\/propertynews\/wp-json\/wp\/v2\/tags?post=4436"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}