It is estimated that investors from the Middle East will spend $180bn on commercial real estate abroad in the coming decade, and that nearly half of that will be directed at the UK.
The research, conducted by CBRE, predicts that $85 will flow into the UK and a further $60bn to continental Europe: in total this will be almost five times higher than during the previous decade.
Iryna Pylypchuk, a researcher at CBRE, thinks that a number of factors are driving Middle Eastern real estate investors to look towards Europe. "Culture, openness and favourable taxation laws are significant push factors for Middle Eastern buyers toward Europe, and the UK in particular,” she says.
“Close historical, political and economic relations, as well as Britain's recent decision to become the first non-Muslim nation to issue Shariah-compliant Islamic bonds, confirm Europe as the favoured destination for Middle Eastern capital."
Lack of opportunity at home
The huge flow of capital out of the region is put down to a combination of huge spending power in the region and a lack of institutional real estate in domestic markets.
"The 'buy and hold' strategy adopted by many Middle Eastern investors within their home region and the resultant lack of deal flow opportunities leaves much unsatisfied demand here,” says Nick Maclean, Managing Director of CBRE Middle East. “Coupled with increased confidence in global markets and the need for diversification, overseas investment has grown strongly."