Global property advisory firm CB Richard Ellis Group said the most dynamic growth markets of the realty sector are located in the Gulf.


The supply pipeline for commercial real estate may go some way in satisfying demand, but the outlook in the Gulf continues to look good in spite of inflationary pressures, according to CB Richard Ellis.

The firm said Europe’s commercial real estate investment market had reached $388 billion (Dh1.4 trillion), six per cent 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, said the most dynamic growth markets are located in regions such as the Gulf.

The firm’s keynote presentation at the recent Mipim, the world’s leading real estate event, 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 $71bn, beating the previous high of $67bn in the fourth quarter of 2006.

However, the outlook for 2008 means 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 per cent 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.”

The Mena area is witnessing unprecedented investment in real estate from within the region, while high oil prices have created equally unprecedented levels of liquidity.

Outward investment is also buoyant with many investors eyeing the relatively good0value 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 per cent lower than four months ago.”