Dubai - Mubasher: Regional investors' appetite for global real estate investment opportunities is expected to grow, with GCC economies likely to be relative global outperformers in 2022 and 2023, according to JLL’s latest report.
The challenges posed by spiraling inflation, higher energy costs, and hawkish monetary policy are affecting investor sentiment globally. This is not only triggering delayed decision-making but also weakening liquidity in international real estate markets.
However, the Middle East, in particular the GCC, is going against the current stand, as the region's relatively robust economic conditions have helped cement market confidence and enhance appetite for discounted investment opportunities abroad.
Fadi Moussalli, Executive Director, International Capital Coverage (ICC), said: “While the healthy momentum of global real estate investment by GCC’s state-owned entities and sovereign wealth funds will continue in the near-term, in all probability, they will proceed with caution and selectivity. Although oil prices have seen a partial reversal in recent months, they remain elevated in comparison to recent history and are unlikely to significantly impact investor confidence in the region.”
He added: “Therefore, the willingness of investors to take advantage of discounted buying opportunities will continue to emerge in the face of the uncertain economic outlook in Europe and the US and moderated competition in bidding.”
Moving forward, shifts to portfolio strategies in favour of new economic sectors are anticipated. While the office and hotel sectors have governed preferences in the past in cities such as London, Paris, and New York, there has been a shift to higher-growth sectors such as living and logistics.
Within the evolving real estate investment landscape in the region, investment platforms continue to be a major source of outbound capital from the Middle East, and many of these groups are underweight in real estate and under pressure to identify opportunities to deploy capital.
The recent rising interest rate environment has led them to re-evaluate tactics with a greater emphasis on educating their investors and venturing into new geographies, sectors, and throughout the capital stack. There is likely to be a deeper focus on M&A and strategic partnerships.