With oil prices above USD 70 per barrel for the first time since 2014, overseas real estate transaction volumes by Middle Eastern buyers are set to pick up, reflecting adjustment in investors' strategies, according to a new report by JLL titled Top Themes Driving Middle East Outbound Real Estate Flows in 2018.
According to JLL, Middle East investment flows into global commercial real estate decreased from USD 12.2 billion in 2016 to USD 9.1 billion in 2017, however, Middle Eastern buyers are expected to regain their competitiveness and dive deeper into established real estate markets of continental Europe, contributing to the recovery of outbound investment volumes in the future.
The report reveals that investors from the region are looking beyond mainstream asset classes and are following the global trend of investing into alternative assets such as student housing, hospitals and senior housing. Historically, offices and hotels have represented their 'comfort zone' and accounted for 85% of commercial real estate investment flows from the region each year. “This change in mentality suggests that in their permanent quest for higher yield, investors are now more willing to move up the risk curve,” said Fadi Moussalli, Head of International Capital Group, MENA at JLL.