The Mena real estate sector is missing out on global capital flows, says a report by leading real estate investment and advisory firm Jones Lang LaSalle.
The report also indicates that although investment appetite exists, the region is missing out on significant regional and global capital flows because of the shortage of investment grade product and the lingering price gap between buyers and sellers.
While the survey is now in its sixth year, this is a newly-launched institutional edition, which focuses on understanding the perspectives of the top 30 financial institutions investing in regional real estate markets.
This latest version highlights two clear trends. First, the amount of overseas capital allocated to investing in Mena real estate is negligible.
Second, although local investors are seeking to increase exposure within the region – particularly in those countries considered stable like the UAE and Qatar – activity is limited by type of product available and asset pricing that does not fully incorporate local market risks. In a region awash with liquidity, the lack of tenable investment opportunities leads investors to deploy capital overseas.
Clearly, the Mena real estate markets have the potential to capture a much higher proportion of capital flows from both international and regional buyers. “Whilst recent events have created some uncertainty across Mena, there are areas within the region, particularly the GCC, where there remains a reasonable level of demand among local investors,” said Jones Lang LaSalle head of capital markets for the Mena region Andrew Charlesworth. “The problem is one of finding and securing the right product at a price that makes sense.”
The 2011 institutional edition of the Mena real estate investor sentiment survey focussed on understanding the perspective of 30 key regional – primarily institutional – investors, but the sample also includes some international investment groups to provide a global perspective.