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Middle East SWFs remain active buyers of global real estate

December 2015

December 15, 2015 | 11:20 | Dubai

Despite lower oil prices, Middle East SWF’s remained active purchasers of global real estate during 2015. A total of 38 deals worth $6.5 billion were transacted over the 9 months to September 2015, according to data by JLL, the real estate investment and advisory firm. While the number of overseas transactions has declined from the 74 deals seen in 2013, the value of investment has remained high and is likely to exceed that experienced in 2014. The volume of investment is expected to decline in 2016 as we enter a prolonged period of lower oil prices that will cause sovereigns to reconsider their objectives and strategies.

However, some of the decline in SWF offshore investment is likely to be offset by private investors from the Middle East who are becoming more active purchasers of overseas property. Within the Middle East, levels of real estate investment have declined in 2015. Data from the Dubai Land Department (DLD) shows the number of real estate sales has declined by around 26% in the year to September 2015 compared to the same period last year. The pattern of investment has also changed, with the fall in the number of residential sales being partly offset by an increase in the value of land sales. Lower oil prices and the stronger US dollar have combined to reduce the inflow of capital into Dubai’s real estate market over the past 18 months.

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