Investments from the Middle East in the global real estate market, during the first six months of the year, increased 62 percent year-on-year to $8.9 billion, this is according to London-based global real estate services provider Savills.
In regard to this increased pace of outbound investment, Steven Morgan, CEO at Savills Middle East, was cited by media reports as saying, “Middle East investors are increasingly drawn towards global real estate assets as long-term investments. That interest has translated into a sharp increase in cross-border transactions, particularly into mature global destinations such as Northern Europe and North America.”
City-specific, London continued to be the most popular for such investments. Despite Brexit concerns, it managed to attract investments from all over the world as investors were keen to make the best of its currency exchange rates. According to Savills, a £5 million investment in London’s prime central real estate would today effectively cost 40 percent lesser when compared to five years ago, on a pre-tax basis.
Exchange rate aside, the UK capital is also be favored as it has seen a price correction. In this regard, Morgan said that prices in a prime central London area were 20 percent lower than five years ago. Investors from the Middle East hence, seem to be taking advantage of both these factors.
Meanwhile, according to another report, the US receives the majority of the outbound Middle East real estate investment. In 2018, while around $3.3 billion of the total outbound investment went to the US, $2.7 billion went to the UK, $700 million to the Netherlands, $600 million to Germany and $300 million to Spain.
Besides London, other global cities that are attracting foreign real estate investment include New York, Paris, Hong Kong, and Amsterdam.