ME funds on $18.8bn property acquisition spree
Dubai, April 1, 2014
Middle Eastern sovereign wealth funds doubled their acquisitions to $18.8 billion, with the UK and US as firm targets, a report said.
This trend is expected to continue apace, with the range of target markets likely to broaden, added the Global Capital Markets Spring 2014 report released by Knight Frank, a leading residential and commercial property consultant.
Global transaction volumes for commercial property are set to see growth of at least 15 per cent in 2014, which will take the annual total to well in excess of $600 billion, said the report.
Global transaction volumes for commercial property (retail, offices, industrial and hotels) amounted to $536.7 billion in 2013 - a rise of 18 per cent on 2012 and the highest total since 2007.
The amount of investment capital emanating from China and the Middle East has increased sharply. Real Capital Analytics data shows that, in 2013, Chinese investment in global markets tripled to at least $14.3 billion, according to the report.
Knight Frank's director of Capital Markets, Joseph Morris, said: "Property yields continue to offer a significant margin over government bonds in most markets. While pricing at the prime end of the market will remain keen, yield compression will slow, as investor attention gradually shifts towards higher-yielding opportunities which offer good prospects for growth."
Knight Frank's research manager for the Middle East, Khawar Khan, said: "The weight of capital seeking exposure to real estate continues to increase, with investors being drawn to the asset class by its income-producing qualities, the improving availability of debt and a steady recovery in global occupier markets. As a result, global investment volumes should comfortably exceed the US$600bn mark in 2014." – TradeArabia News Service