Samir Salya on the Middle East’s overseas buying

In 2015, the wealthy investors of the Middle East spent a record $30 billion. This year, it’s dipped to $16 billion, and looks likely to stay at this level.

Investors have cut their overseas spend nearly in half since 2015. This is down to the unpredictability of oil prices and the slowdown in economic growth.

Compares well to previous years

Despite the figure lowering to $16 billion, it’s an amount that compares well to the spend in 2013 and 2014 ($14 billion and $15 billion respectively). Oil prices were high in those years, before they started to drop in Q3 2014.

The increasing investment during the last couple of years has meant much larger individual investment transactions. Countries including the UK, the US and Germany have been at the top of the list for most Middle Eastern investors and buyers.

Top global cities

According to figures from leading real estate consultancy Knight Frank, the top cities in the world for Middle Eastern investment in 2016 were Central London, Paris, Berlin and New York.

During this period, 24% of global high net worth investors bought up real estate. Around 27% of all property transactions in the commercial sector involved a private buyer. The UK was the top country for commercial individual investments. This shows that the uncertainties surrounding Brexit and what the market will look like in 2019 hasn’t dented enthusiasm for luxury property investment in Central London.

Private wealth in property

Around 25% of all private wealth is tied up in real estate investments of some description. These figures exclude primary homes and secondary residences. According to the report from Knight Frank, this is “the highest allocation since records began.”

Ultra-high net worth individuals (UHNWI) are defined as those who have more than $30 million in net assets. Anthony Duggan, Head of Capital Market Research for Knight Frank, says: “We predict that private investors will continue to take global market share as both the number of wealthy individuals and their assets grow. The number of these super-wealthy rose by “6,340 in 2016 alone, taking the total to 193,490”.

The report goes on to show that 32% of UNHWIs will invest in real estate overseas over the next two years.

Asia challenging the US

In a significant change to the number and location of UHNWIs, Asia is starting to catch up with the US. Asia has around 27,020 fewer UHNWIs than the US, but this is predicted to change. By 2026, it’s expected that this difference will have come down to around 7,068. China will lead the way in terms of ultra-wealthy residents, and areas such as India, Sri Lanka and Vietnam will also have increasing numbers.

About Samir Salya

Samir Salya is the Chairman of Reign Holdings, and is involved in UK and UAE real estate and construction. Samir holds over 20 years’ experience in executive management, business expansion, performance improvement, sales and marketing