GCC economies are expected to outperform the majority of global markets in 2023, hence regional investors’ appetite for global real estate investment opportunities is likely to grow.
According to Jones Lang LaSalle Incorporated (JLL), a global commercial real estate services company, the challenges posed by spiraling inflation, elevated energy costs, and hawkish monetary policy are impacting investor sentiment globally and this is not only triggering delayed decision-making but also weakening liquidity in international real estate markets, further painting an uncertain global outlook.
“While the healthy momentum of global real estate investment by GCC's state-owned entities and sovereign wealth funds will continue in the near-term, in all probability, they will proceed with caution and selectivity. Although oil prices have seen a partial reversal in recent months, they remain elevated in comparison to recent history and are unlikely to significantly impact investor confidence in the region,” said Fadi Moussalli, Executive Director, International Capital Coverage.
“Therefore, the willingness of investors to take advantage of discounted buying opportunities will continue to emerge in the face of the uncertain economic outlook in Europe and the United States and moderated competition in bidding,” Moussalli added.
In JLL’s report, titled ‘The Resurgence of Outbound Real Estate Investment from the GCC’, the Middle East, in particular the GCC, is bucking this trend, as the region’s relatively robust economic conditions have helped strengthen market confidence as well as enhance appetite for discounted investment opportunities abroad, the firm noted.
In addition, the strong recovery in oil prices from mid-2020 has also served as an impetus for increased consumer confidence and buoyant investor sentiment in the region, leading to higher levels of capital being deployed into international real estate.
Data also shows that despite weakening economic growth globally, occupier demand for industrial and logistics space remains resilient, despite lack of available premises continuing to be a factor. As for the living sector, whilst signs of slow-down have emerged recently, evidenced by a moderation in rent growth, long-term tailwinds favor the sector and are expected to support resilience in performance.
As a consequence, GCC investors have significantly increased activity in the sector since 2020, and with living volumes now driving one-third of global investment, the sector is expected to become a more meaningful component of their portfolios.
