“This can potentially include expanding the reach of the North American market to Canada, strategic investments in destinations in Asia with links to the UK like Singapore, as well as emerging asset classes linked to the real economy and its digitalization, such as e-commerce from warehouses and retail distribution centers to new critical infrastructure assets such as data centers.
The top 25 institutional real estate investors the study focused on are all in the Arabian Peninsula, in particular Saudi Arabia, UAE, Qatar, Kuwait, Bahrain and Oman of the Gulf Cooperation Council (GCC), the region which accounts for 90% of all investment in the Middle East, said Alpha1Estates.
Institutional real estate investments in the Middle East span the entire value chain, on which Alpha1Estates has advised over US $ 2 billion worth since 2018, and are diversified, ranging from sovereign purchases of trophy assets to famous hotels and mansions with traditional real estate. assets such as residential and office spaces and emerging asset classes such as student housing.
Sovereign-led real estate investments during the study period in the Middle East in London included the historic Ritz hotel for US $ 1 billion in 2020, at the start of the global COVID-19 pandemic, and in New York have included the monument Plaza Hotel for $ 600 million in 2020.
In the Middle East, Alpha1Estates CEO Talal Mahmood Malik Al-Alawi has already met HRH Prince Salman bin Hamad Al Khalifa, Crown Prince and Prime Minister of the Kingdom of Bahrain; HRH Prince Mohammed bin Salman Al Saud, Crown Prince, Deputy Prime Minister and Minister of Defense of the Kingdom of Saudi Arabia; and His Royal Highness Sheikh Mohammed bin Rashid Al Maktoum, Vice President of the United Arab Emirates, Prime Minister and Minister of Defense and Ruler of Dubai.
Mr. Malik has also been recognized as a Strategic Advisor by the Royal Courts of the Arabian Peninsula, establishing relationships with the six Royal Courts of the GCC during his tenure as Senior Management Advisor in the region for the prestigious firm. Management Consulting, McKinsey & Company from 2008 to 2014, with a strengthening of these relationships since 2014 to date as a trusted advisor.
DIVERSIFICATION OF DESTINATIONS
According to the Alpha1Estates report, the main destinations for institutional real estate investment in the Middle East are the United Kingdom and the United States, with more than 30% of regional active investors concentrated in the two transatlantic countries.
With the UK having a priority advantage, London remains a permanent favorite, but a more regional focus in the UK is underway and is seeking higher comparative returns on assets such as offices, retail and logistics, as in Manchester and Belfast, Northern Ireland.
Likewise, in the United States, global cities like New York figure naturally, but with strategic investments also in states like Connecticut, Virginia and Pennsylvania.
Europe, excluding the United Kingdom, is the leading region for institutional real estate investment in the Middle East, with almost half of the active investors concentrated in the region, with most of the investments in France, naturally in Paris, in Germany, in particular Frankfurt and Düsseldorf, as well as the Netherlands with transactions in Ireland, Greece and Hungary also recorded.
“Although from 2020 many companies have switched to remote working due to the pandemic, we have seen major acquisitions of office space in European markets,” said Diaa Salah, vice president – Global Investments, Alpha1Estates.
“European real estate markets in particular are attracting more institutional investors from the Middle East, and we expect transactions to increase in 2022.”
Within the Arabian Peninsula Gulf Cooperation Council countries, more than 50 percent of Middle Eastern investors also focus on regional activity, especially in the global city of Dubai, United Arab Emirates, or in some cases, particularly in Saudi Arabia or Bahrain, on dominant domestic investments in the market.
In Asia-Pacific, transactions were recorded in India and Australia, not yet showing a major pivot towards Asia but an existing potential.
“Asia, with its proximity and traditional ties to the Middle East, has significant growth potential for institutional investors, particularly with Singapore and Hong Kong, but is starting from a nascent position as Chinese investors comparison naturally have a strong well-being. base established, ”said Mr. Malik.
DIVERSIFICATION OF ASSETS
Real estate investors in the Middle East have steadily accelerated the diversification of assets in their portfolios, with the bulk in traditional assets but allocations to more emerging asset classes with regard to the real economy and its changing cyclical nature. .
In traditional real estate assets, over 40% of institutional real estate investors in the Middle East target residential and office targets, followed by 28% on commercial and industrial assets and 24% on hotel and hotel assets (trophy assets not included). ) and business assets.
“Brick-and-mortar office space after COVID may actually increase cumulatively, based on greater entrepreneurial activity from entrepreneurs and businesses as they enter growing industries with new businesses, provided let the incentives be there, ”said Malik.
In emerging asset classes, investors in the Middle East are increasing their allocations, particularly with generation-focused assets such as 16% of investors focused on student housing with a pinch of strategic investments in senior lives , health and wellness, and life sciences.
“E-commerce – combining retail, commerce, digitization, industrial, labor and logistics assets – is a key regional and global growth sector, with institutional real estate investors from the Middle East poised to increase their investments in retail warehouses, distribution centers, workforce hosting and data centers, both in current low-supply assets and in financing new ones developments to meet emerging demand, ”said Mr. Malik.
Particularly during and beyond the COVID-19 period, some real estate investors in the Middle East have also refocused part of their investments on their country and their region, due to its strategic location, between Europe, Africa and Asia and its central global role in energy. , trade and supply chain logistics.
According to Lloyds in 2021, in the Gulf of the Middle East, the port of Jebel Ali in Dubai, United Arab Emirates, ranks 11th among the top 100 ports in the world in terms of throughput, with the port of Salalah in Oman in Rank 43 and the port of Al Khalifa in Abu Dhabi, United Arab Emirates, at 56, while on the Mediterranean, the port of Alexandria in Egypt ranks at 99.
The size of Saudi Arabia gives it a strategic reach with the port of Dammam on the Gulf at 93, but also a dominant flow on the Red Sea, which represents 10% of world commercial traffic, with the Islamic port of Jeddah in Saudi Arabia at 37 and King Abdullah Port at 84, the latter recognized by the World Bank and IHS Markit as the second most efficient container port in the world in 2020, under the leadership of CEO Jay New, after the port of Yokohama in Japan.
Specifically in Saudi Arabia, the government announced in January 2021 that it would invest US $ 220 billion in the development of Riyadh over the next decade to make it one of the 10 largest cities in the world, and in the Western Province, in August 2021, he also announced a 15-year Heritage Restoration of the Red Sea City of Jeddah, the gateway to the two holy cities of Mecca and Medina, where many of the largest real estate investment trusts (REITs).
In February 2021, Alpha1Estates announced that its real estate index for Mecca and Medina had fallen 7.6% in 2020, as the COVID-19 pandemic and the global lockdown crippled travel to holy cities.
Saudi Arabia also has several giga-projects on the Red Sea under its sovereign wealth fund, the Public Investment Fund (PIF), including King Abdullah Economic City (KAEC), which is, in the fourth quarter of 2021, the most advanced giga of the PIF. -project, the Red Sea and Amaala development project, as well as the future-oriented city of NEOM. Talal Malik regularly attends PIF’s Future Investment Initiative conference, one of 150 special guests invited to physically attend the fourth edition of the conference in Riyadh on January 27-28, 2021, and is expected to attend the fifth edition on January 25 and October 28. 2021.
Alpha1Estates, launched in 2006 to become the world’s first company to market Saudi real estate globally, has worked with three of Saudi Arabia’s top five real estate developers, five of the largest in the Middle East and on deals global real estate since 2018 ranging from $ 632 million to $ 1.5 billion for Royal Family offices, high net worth individuals (UHNWI), sovereign institutions and institutional real estate investors.
ABOUT ALPHA1ESTATES INTERNATIONAL
Alpha1Estates ™ (Real Estate. ENHANCED) is a global real estate consulting, investment and development company focused on major emerging and rapidly developing markets, prestigious projects and world class trophies. He has also mainly focused on facilitating capital investments from and to emerging real estate markets, in particular the Middle East. Please visit www.Alpha1Estates.com
© Press release 2021