Europe's commercial real estate growth eclipsed by Gulf

CB Richard Ellis Group, Inc. recently announced at MIPIM, the world's leading real estate event held annually in Cannes, that final figures for 2007 showed Europe's commercial real estate investment market had reached $388bn, 6% higher than the previous year's record level.

Whilst painting a positive picture about long term prospects of certain European markets, the firm's MENA region managing director, Nick Maclean, says that the most dynamic growth markets are located in regions like the Gulf.

The firm's keynote presentation at MIPIM suggested that the effects of the constrained credit markets were noticeable in the fourth quarter, but were largely limited to the UK. In fact, continental European investment activity in the fourth quarter, excluding the UK, actually achieved a record high at $71 billion, beating the previous high of $67 billion in the fourth quarter of 2006.

However the outlook for 2008 means that the main growth in the global commercial real estate investment sector is expected to come from emerging markets.

Maclean said "the UAE in particular will be one of the key global hot spots at the forefront of this trend with an expected growth of inbound foreign direct investment of 30% this year. Based on current stock levels and developments already in the pipeline, commercial real estate will continue to experience significant yield increases as demand for good quality commercial real estate is keeping up with supply."

Whilst the MENA area is witnessing unprecedented investment in real estate from within the region, high oil prices have created equally unprecedented levels of liquidity. Outward investment is also buoyant with many investors eyeing the relatively good value opportunities in mature markets.

Maclean said "shrewd investors are seeking to take advantage of the global credit squeeze and acquire property investments that are trading at levels 10 - 15% lower than four months ago."