Aug 18 2014

Arab investors to pump huge funds to Europe

DOHA: Arab investors are increasingly looking to the UK and continental Europe's commercial real estate markets to pump their huge funds. Europe is the preferred target of Arab investors with 80 percent of the expected $180bn Arab investment flowing in to UK and Europe over the next 10 years. In the UK, London is the preferred destination.

"Arabs have invested heavily in European commercial real estate in recent years and have made huge profits from these investments. Even those who did not make good profits were able to maintain the value of their wealth, at a time when trillions of dollars evaporated from the real estate sector on both sides of the Atlantic, Arab news portal Al Jadid reported.

Some of the cash-rich Arab countries are unwilling to invest in the region because of the protracted social and political tensions in the region and see European market as safe havens to park their money. According to the latest report by global property advisor CBRE, Middle Eastern investors are expected to spend $180bn in commercial real estate markets outside of their own region over the next decade.

The major increase in flows of Middle Eastern capital into global markets is emerging from the extraordinary mismatch between the lack of institutional real estate in domestic markets and the huge spending power concentrated in the region.

The British commercial real estate, specially the City of London, is expected to take the greatest share of GCC's real estate investments..

Global real estate markets have seen significant inflow of Middle Eastern capital with $45bn invested between 2007 and the end of last year -- seven times the reported activity in its home market.

According to the Arab news portal, the Middle East Sovereign Wealth Funds (SWFs), which makes up 35 percent of SWFs assets under management are among the world's largest source of capital.

According to global investment consultants, Europe is a rather new market for the Gulf investors. Now their preferred destinations in Europe are Paris, Berlin, Frankfurt and Zurich. The GCC investment in this region is expected to touch $60bn in short to medium term. The prices in continental Europe are more attractive than London.

© The Peninsula 2014

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