Middle East economies, specifically the Gulf Cooperation Council countries (GCC), currently fund almost 25 per cent of global real estate development activities, according to Jones Lang LaSalle's latest Global Real Estate Capital Report.
This is primarily happening in home markets of the GCC as well as international investments such as real estate funds.Middle Eastern economies remain buoyed by sustained high energy price levels and are estimated to achieve current account surpluses approaching $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.Investors from Gulf Cooperation Council (GCC) countries remained strong backers of global real estate markets throughout 2006, investing US$13 billion, 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.Furthermore, GCC International Real Estate Investments have doubled since 2004, with the GCC representing the third largest group of inter-regional investors.
GCC investors transacted significantly more assets than ever before in 2006, selling US$2 billion of investment grade real estate in both the United States and the United Kingdom, up 50% on 2005.
"GCC funds are focusing less on trophy assets and are making significant purchases in emerging markets, including the entire Cape Town waterfront development and Europe's largest shopping centre in Istanbul. As well as looking for opportunities in emerging markets, GCC funds are also looking for value added opportunities," commented Tony Horrell, CEO of Jones Lang LaSalle's International Capital Group.
Jones Lang LaSalle is regionally active in more than 24 MENA countries from Morocco to Pakistan. Over the past year the Middle East North African office has worked on projects valued in excess of US$ 120 billion.