Middle East investment in Europe rose by 25 per cent year on year in the first half of 2014 to €5.9 billion, while the total cross border investment in Europe rose by nearly a third (32 per cent) to top €44 billion. Middle East capital accounted for approximately 13 per cent of cross border capital coming from outside of Europe and was the second largest investment group into Europe following North America (€18 billion).
While Central London continues to dominate, now paying sub-5% yields, Colliers’ Capital Flows Quarterly Report also highlights growing interest in alternative product in continental Europe.
John D. Davis, Chief Executive Office, Middle East & North Africa at Colliers International, said: “Middle Eastern buyers are increasingly prepared to venture outside Central London, looking at alternative asset classes such as hotels and serviced apartments in other tier 1 cities. Recent examples include Qatar Investment Authority’s acquisition of five more properties to its hotel portfolio, located in Cannes, Madrid, Frankfurt, Amsterdam and Rome, while Qatar Armed Forces Investment Portfolio acquired the Hotel Renaissance in Barcelona for approximately €78 million.”
“We have also seen Middle East investors play a key role in major deals in Central London during H12014, for example China Life and Qatar Investment Authority taking a 90% interest (70% +20%) in Clifford Chance HQ in Canary Wharf.”
Canadian investors are increasingly active in continental Europe, together with Australian funds and Sovereign Wealth Funds (SWFs) like NBIM and Kuwait Investment Authority eyeing European expansion.
There has also been growing foreign interest in Dutch residential, while German investors cement their presence in Amsterdam CBD. Transaction volumes in the Netherlands reached nearly €4 billion in H1 alone (+70 per y-o-y), of which €2.4 billion was cross border capital.
Bruno Berretta, Senior Research Analyst for EMEA at Colliers International, said, “Spain has also seen a pleasing revival in transactions as investors widen their focus to retail and development opportunities. Cross border investment in Spain reached €2.3 billion in H1 2014, up from €780 million a year ago.”
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