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Commentary from the Middle East office on the C&W global report ' Global Investment Atlas 2011'
9 Mar, 2011, Dubai
Global property investment market recovery to continue in 2011 but occupier markets will drive perormance
• Global investment is expected to increase by 5-10% in 2011, hitting US$606bn.
• North America and emerging markets to lead, with investment in Latin America and Eastern
Europe forecast to rise by over 40% this year.
• Asia to grow further but activity in parts of China will slow as policy is tightened
Global property investment markets are expected to continue recovering this year, according to Cushman & Wakefield’s International Investment Atlas 2011. Whilst the Middle East and Africa as a whole lagged the global property recovery last year - with investment volumes falling 43% - some markets, including Egypt and Morocco showed a strong performance.
It is too early to assess the full impact of the current unrest in parts of the region. However the uncertainty alone may potentially divert investment interest to other areas in the short term. On a more positive note, it may well be a catalyst for much greater future engagement with the region and may in some cases open the way to an increase in foreign investment over the medium to longer term.
In the Gulf, confidence started to improve in the latter months of 2010 with increased investor appetite focused on quality, well-let assets and some increase in occupational activity as tenants took advantage of the market. Yields appeared to stabilise although a lack of transactions may mask this to some extent and a gap still exists in some markets between buyer and seller opinions.
Within the UAE the challenging markets of 2009 and 2010 led to subdued levels of investment. In 2010 investment fell by 39.1% from 2009 (excluding residential and transactions below USD 5 million). Although investment still took place it was predominately at a local investor level with smaller deals in terms of both size and price.
We expect to see greater stability in 2011, however in line with the region as a whole, this investor activity will be restricted to established locations and quality products. Secondary locations and inferior quality buildings will continue to suffer.
A combination of increased local demand and more foreign interest, particularly from Asia, should bolster some GCC markets once the current situation stabilises. At the same time, the flow of outward investment from the region is likely to increase. Many of the biggest investors in the area will not be panicked by recent events but it will clearly underline the advantages of diversification into more stable areas and strong, liquid global gateway markets for low risk long-term buyers will benefit.
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