Observers predict that the amount of money flowing from the Middle East into direct real estate investment will reach $15 billion annually in the near term. This is due to the decline in oil prices and fundamental shifts in global economic strategies.
A report issued by the global real estate consultancy firm CBRE indicated that the Middle Eastern investor base has expanded, driven by the decline in oil prices. This has led to a radical shift in global investment strategies towards greater geographical and sectoral diversification, with these investments spreading beyond major markets to second-tier markets in Europe and the Americas.
The report explained that the proportion of Middle Eastern capital targeting US markets is clearly increasing; the first quarter of 2015 saw global investments worth $5 billion distributed equally between European and American markets, with a clear focus on cities such as New York, Washington, Los Angeles and Atlanta.
In 2014, the Middle East continued to strengthen its position as one of the most important sources of cross-border capital in the global real estate market, with foreign investments amounting to $14 billion – the third largest source of capital worldwide.
Although London maintained its leading position, it no longer has a firm grip on the market, with its share of total outward investment from the Middle East reaching 32 percent in 2014, compared to 45 percent in 2013.
Paris and New York followed London's lead, accounting for 15.8 percent and 9.6 percent of total foreign investment, respectively. CBRE forecasts that global real estate investment from non-institutional capital flowing from the Middle East will range between $6 billion and $7 billion annually in the foreseeable future, if not exceed that amount.
It is worth noting that the value of this investment did not exceed $5 billion per year during the period between 2010 and 2013.
