Middle East investors accounted for nine per cent of the European property market and 21 per cent of all European cross-border transactions in the first half of 2013, according to a new report by CBRE.
Nearly half of the capital from the Middle East that was invested in the European property market came from the region’s sovereign wealth funds. Middle Eastern buyers also showed a strong bias towards London, with office spaces being the top purchases.
“London remains the destination of choice for foreign investors due to its solid growth potential and its status as a global financial hub, alongside its stable political environment and a transparent legal system, which are key for international and regional buyers alike,” said Nick Maclean, managing director, CBRE Middle East.
The total value of commercial real estate investment activity in Europe during Q2 2013 was six per cent higher than Q1 2013 and 22 per cent higher than the same quarter last year.
The report also noted that buyers from outside Europe accounted for more than a quarter of all commercial property transactions in H1 2013.
Cross border investment in European markets also continued to increase with foreign buyers accounting for 44 per cent of all transactions as compared to 40 per cent in the second half of last year.
However the report also found a decline in investors from within Europe, who accounted for just 16 per cent of the total in H1 this year as compared to 20 per cent in 2011 and 2012.
Investment capital from outside Europe accounted for 28 per cent of all transactions in the first half of 2013, but there was a marked change in the source of capital from non-European investors, the report said.
Direct institutional investment in real estate steadily increased over the last six months to reach 26 per cent of the total investment in the first half of 2013. Sovereign wealth funds have also been responsible for the rise in investment while pension funds and insurance companies have been more active than before the financial crisis.
“The increase in the proportion of the market comprised by large transactions coincides with an increase in the amount of non-European capital flowing into the market,” said Jonathan Hull, head of EMEA Capital Markets, CBRE.
“It has long been the case that buyers from outside the region are focused on larger than average assets and H1 2013 was no exception.”