Mideast invests $6bn outside region
by Melissa Hancock on Sunday, 22 April 2007
zoom$4bn worth of Middle Eastern money was invested into the US last year, almost half in New York City.Middle East economies, specifically the GCC countries, currently fund almost 25% of global real estate development, according to Jones Lang LaSalle's latest Global Real Estate Capital Report.
The report showed that GCC countries remained strong backers of global real estate markets throughout 2006, investing US$13bn, up by 14% year-on-year.
Over half of this investment was exported outside of the GCC into the US (US$7bn), followed by the UK (US$4bn), Germany (US$1bn) and South Africa (US$1bn). Major investments were also made in France and Sweden.
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"GCC funds are focusing less on trophy assets and are making significant purchases in emerging markets, including the entire Cape Town waterfront development and Europe's largest shopping centre in Istanbul. As well as looking for opportunities in emerging markets, GCC funds are also looking for value added opportunities," commented Tony Horrell, CEO of Jones Lang LaSalle's International Capital Group.
GCC investors transacted significantly more assets than ever before in 2006, selling US$2bn of investment grade real estate in both the United States and the United Kingdom, up 50% on 2005.
Similarly, the report showed that GCC International Real Estate Investments have doubled since 2004, with the GCC today representing the third largest group of inter-regional investors.
Middle Eastern economies remain buoyed by sustained high energy price levels and are estimated to achieve current account surpluses approaching US$260bn in 2007.
On average, Middle Eastern oil producers are enjoying current account surpluses of 25% of GDP, up from an average of 6% in 2003. Funds are currently investing 5% of these regional current account surpluses in global real estate markets.
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