Focusing on the global flow of monies out of the Middle East, they estimated that 2015 alone saw net acquisitions, such as purchases less sales, of US$16 billion, a near threefold increase on the US$5.5 billion of 2014; however, there was a suggestion that this activity may now be slowing.
Much of this global increase in activity came from investments into the US, with the significant transactions undertaken by Qatar Investment Authority with a 44% stake in the US$8.6 billion mixed use New York development and ADIA with a US$3.1 billion industrial portfolio definitely moving the needle. I’ve reported before on the increased attention the US is receiving from Islamic investors, with the report reminding readers that the US was the first of the G7 countries out of the gate with encouraging GDP growth, thus encouraging international attention.
2015 also saw a shift in sector focus. While offices had previously represented more than 50% of acquisitions, they slipped to below half, with industrial showing a sharp increase. No doubt the aforementioned ADIA transaction helped, but this also matches what we’ve seen from investor wishes.
There was, however, a suggestion that investment activity may be slowing and while you could hardly interpret this as being a stamp on the brakes, perhaps Middle East investors are beginning to come off the gas a little? I’d interpret the market slightly differently, as we are seeing no let-up in investor demand but the volume of available properties has fallen. In the global hunt for yield and with the low cost of finance, many property owners are choosing to refinance rather than sell, which makes it frustrating for investors, whether from the Middle East or otherwise, trying to get in.
Originally published in Islamic Finance News.