Family offices in the Middle East have historically maintained a strong focus on real estate investments, leveraging the asset class for stability and long-term wealth preservation. The report shares that at the end of 2023, Middle Eastern family offices allocated 15% of their portfolios to real estate, materially higher than the global average of 10%. This preference reflects a deep-rooted cultural and financial reliance on property as a key asset class.
Such an allocation followed a decline in proportionate holding of real estate due to global economic uncertainty and rising interest rates. The bottom appears to have reached though, with global family offices including those in the Middle East, planning to increase their real estate exposure.
Looking ahead, Middle Eastern family offices remain committed to real estate as a core asset class. The planned allocation aligns with broader investment trends, as family offices worldwide are shifting towards a more balanced portfolio.
While the US continues to attract significant capital, with UBS sharing that 49% of Middle Eastern portfolios are invested in the region, local real estate markets also remain attractive. With oil wealth fueling economic diversification, investments in prime commercial and residential properties in the GCC region are likely to persist, particularly in Saudi Arabia and Dubai.
So, while the turbulence of the last two years led to a dip in real estate allocations, Middle Eastern family offices remain steadfast in their commitment to the asset class. The anticipated increase in allocation suggests a return to real estate’s traditional role as a cornerstone of wealth preservation in the region.
Written by Philip Churchill, first published in Islamic Finance news Volume 22, Issue 06 dated 12th February.