-US$11.5 Billion Invested Globally from Middle East Buyers in H1 2015-
-Growing Shift Towards Americas; 2007 High-Mark Expected to be Surpassed-
During the first half of 2015, US$11.5 billion of capital flowed out of the Middle East into direct real estate globally—surpassing the previous half-yearly high of US$9.6 billion recorded in H1 2007, 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.
The amount of the region’s foreign investment in H1 2015 makes the Middle East the third-largest source of cross-regional capital globally. Qatar remained the largest source of outbound capital, with a total of US$5.2 billion invested in global assets during H1 2015; the UAE invested US$4.6 billion.
London was the leading beneficiary of investment during the first half of 2015, receiving US$2.8 billion and representing 24 percent of Middle Eastern outbound capital. A notable transaction was Qatar Investment Authority’s US$2.47 billion acquisition of Maybourne Hotels. Hong Kong came in second with US$2.4 billion invested in H1 2015, followed by New York with US$1.1 billion, including Al Faisal Holding’s US$519 million acquisition of the Manhattan at Times Square hotel.
Hotspots for Middle Eastern Investors, H1 2015
There has been a growing shift towards the Americas by Middle Eastern buyers in H1 2015. The $2.7 billion invested in the region during H1 2015 is already on track to surpass the long-term historic annual average. In addition to New York, Washington, D.C., Atlanta and Miami were featured among the top 20 investment hot spots for Middle Eastern buyers in H1 2015.
“For 2015 as a whole, we expect Middle Eastern capital flows into the Americas to break the $5.1 billion high mark recorded in 2007. Due to the size and diversity of Middle Eastern capital from institutional and private sources, it is not surprising that the types and locations of assets have expanded accordingly. We expect this appetite to continue to broaden as the supply demand imbalances in the major markets and traditional asset types are not expected to abate in the near future,” said Spencer Levy, Americas Head of Research, CBRE.
Despite weakening oil prices, acquisitions by sovereign wealth funds (SWFs) increased during H1 2015. SWF spending stood at US$8.3 billion, representing more than 72 percent of total investment. The H1 2015 results were boosted by two large hotel acquisitions in London (US$2.5 billion) and in Hong Kong (US2.4 billion), by two separate SWFs.
Middle Eastern investors are becoming more active across a wider range of sectors. In the last year, the hospitality sector has grown in importance for global investors and continues to attract large inflows of foreign capital. Outbound investments in hotels totaled US$6.8 billion in H1 2015—a major leap compared to the US$1.8 billion for 2014 overall.
Diverse Sector Mix, with Hotels Dominating H1 2015 Activity
“Over the last year and a half, we have seen a general broadening of location and sector selection in the outbound strategies of Middle East investors. From being mainly European/London office-centric buyers, they are now emerging with truly diverse strategies, so much so that the balance has shifted to almost 50 percent of new acquisitions taking place outside of Europe during the first half of 2015. This extends to sector selection, with hotels growing in importance as sovereign wealth funds and high-net-worth individuals focus on real assets that generate long-term revenue,” said Iryna Pylypchuk, Director, Global Research, CBRE.
About CBRE Group, Inc.
CBRE Group, Inc. (NYSE:CBG), a Fortune 500 and S&P 500 company headquartered in Los Angeles, is the world’s largest commercial real estate services and investment firm (in terms of 2014 revenue). The Company has more than 70,000 employees (excluding affiliates), and serves real estate owners, investors and occupiers through more than 400 offices (excluding affiliates) worldwide. CBRE offers strategic advice and execution for property sales and leasing; corporate services; property, facilities and project management; mortgage banking; appraisal and valuation; development services; investment management; and research and consulting. Please visit our website at www.cbre.com.