Positive sentiment about US real estate is on the rise. Although progress has been slow since the 2008 global financial crisis, the real estate industry in the US has been recovering gradually and is now approaching pre-crisis conditions. This demand has been further increased by huge interest from GCC (Gulf Cooperation Council) investors, who have been increasing their investments into the real estate sector over the past few years. These investors have looked toward real estate as a secure investment for the future, given the current geopolitical tensions and oil price fluctuations within their own region. This makes them an ideal group of investors. Here’s five reasons why you should consider pursuing GCC investors for your business case.
They have the capital – USD 15 billion to flow out of GCC into real estate
Even with the economic crisis, GCC investors have huge amounts of disposable capital. The amount of capital currently being invested by the Middle East region makes them a crucial region in global real estate. Nick Maclean, Managing Director, CBRE Middle East, said “The size of the region’s foreign investment makes the Middle East the third largest source of cross regional capital globally as Arab investors look for brighter investment prospects internationally”. CBRE forecast that USD 15 billion will flow from the Middle East annually into direct real estate, which further shows the wealth available within the region.
They want to invest in your projects
An improving US economy and decreasing unemployment is having a positive effect on the US real estate market and convincing investors that it is an ideal place to weather the economic storm and make positive returns whilst doing so. An astonishing 94 percent of global investors identified the US as their primary destination of choice for outbound capital in 2016.
The deteriorating Chinese economy along with slumping oil prices has caused concern amongst global investors. As these trends continue, GCC investors are expected to continue their movements toward more stable, established markets such as that of the US. This surge in investment is having – and is expected to continue having – a positive effect on investor returns.
GCC investors seeking to diversify into more secure investments
With the current levels of volatility in the global stock market, many investors are moving toward more secure and longer-term investments such as real estate. For many, real estate offers the perfect opportunity to realize good returns while also managing risk. GCC investors see an investment in US real estate as an ‘insurance policy’ against the local pressures in their home region.
Changes in US legislation has made investing in US real estate more appealing
Recent changes in U.S. legislation which eases taxes for foreign investors and simplifies the buying process is expected to help draw more investment than in 2015. A survey conducted by the Association of Foreign Investors in Real Estate (AFIRE) found that 64 percent of investors said they planned to increase their investments in American real estate in 2016. Only 11 percent stated they would decrease investment.
Naseba is a multinational business facilitation company with 14 years of experience in regional deal facilitation. Our investor introduction division has successfully built and leveraged an extensive network of contacts in the GCC. These contacts include institutional investors, high net worth individuals and members of royalty.
Our investor analysts speak with investors on a daily basis to understand their needs and mandates. The most recent results of these research calls indicate that investors are seeking to divest from the Middle East into core assets in prime property markets, including London.
On May 25th 2016, Naseba will be organizing an international Real Estate Investors Meeting in Kuwait City, Kuwait. At the meeting, pre-qualified real estate investment opportunities from around the world will be introduced to liquid investors from the Gulf region, including Saudi Arabia and the UAE.
To submit your business case and register for the meeting, click here.
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