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Middle Eastern syndicate and real estate asset management platforms are emerging as major and increasing sources of outbound capital from the region with new figures showing an increase in volumes.
“Typically, they exist to pool equity from multiple private and medium-size institutional investors to real estate assets on a deal-by-deal basis,” said Fadi Moussalli head of JLL’s International Capital Group, MENA. “In the first three quarters of 2016 the volume has already reached $5.1bn and we expect the end-year figure to reach around 7bn.”
Institutional players such as Sovereign Wealth Funds remain the major source of wealth flowing from the Middle East with deal sizes often in excess of US 150 million. However, between 2011 and 2015 private investors and syndicating platforms closed three times as many transactions as institutional players, albeit targeting smaller lot sizes of between US$10 and US$60 million. The rise of new this investor type follows the well-documented trend among Middle Eastern investors to diversify into new markets. In the last 18 months the top five cities targeted by Middle Eastern investors were: London ($5.2bn), New York ($1.8bn), Paris ($0.6bn), San Francisco ($0.2bn) and Washington DC ($0.2bn).
And, while figures show that London remains the top investment destination, 40 percent of deals in the last 24 months have taken place in the UK regions. Moussalli said: “Investors can achieve high single digit cash-on-cash returns and stable long term income stream by casting their net outside of the UK capital. A departure from the traditional focus on Europe and increased appetite for the US is clearly visible. “Until further notice, I do not expect any slowing down in Middle Eastern Investor’s appetite when looking at opportunities in the US.”