Middle East investment in commercial real estate has experienced a substantial uptick in the U.S., with Chicago now a top 15 global target for major investors from that region, according to a recent report from CBRE.
In H1 2016, Middle East global investment reached nearly $10 billion. Since being at the bottom of the market in 2009, investment from the Middle East has grown much faster than the market as a whole and faster than any other cross-regional investment. The sharp increase in investment was driven by Sovereign Wealth Funds (SWFs)–in particular those from Qatar and the UAE.
Chicago has become a beneficiary of this activity, receiving $364 million in direct investments between 2015-H1 2016, making it the sixth largest Market for Middle East investment in the U.S.
Not only has investment in the U.S. increased from these investors, but a diversification of funds across different asset classes has taken place as well.
- Between 2010 and 2014, the office sector dominated purchases by Middle Eastern investors, accounting for 53 percent of the total, with hotels a distant second at 17 percent.
- In 2015, hotels and offices were tied, with purchases totaling US$8.2 billion (35 percent of the total) in each sector.
- Industrial also saw a sharp increase in 2015 to 9 percent of the total, compared to just 3 percent over the previous five years. The industrial sector typically makes up a larger proportion of the market in North America than in other regions; if the strong flows into that region continue, so too should the growth in industrial investment
With a healthy supply of investment grade properties and a broad base of asset classes, Chicago should continue to be a target for this investor class.
Read the entire report here: https://researchgateway.cbre.com/Layouts/PublicReportAccess/Default.aspx?PUBID=a6359dca-a6e7-4af0-bd65-510d20ac6252