Investors in the Middle East showed an appetite for hotel and residential assets above the other asset classes, with residential in Saudi Arabia and hotels in Egypt the most popular investment targets, the 2011 Global Investor Sentiment Survey released by Colliers International, commercial real estate services company, showed. Majority of investors in the Middle East said they were more than likely to look to increase their real estate holdings over the next 12 months, the survey said. Seventy percent of the investors in the Middle East believed that the relative value of real estate had improved strongly compared to 10 years previously. Strong increases in output and growing populations in the region making real estate a fundamentally more important asset within their economies. Two-thirds of them targeted returns in the region of 15-20 percent, the survey said. "Demand continues to outpace supply in the lower end of the residential property sector in Saudi Arabia. However, with government plans to spend nearly $70 billion on low-income housing to satisfy the demand of a growing and financially empowered middle class, the market outlook for Saudi looks particularly strong," said John Davis, chief executive officer, Colliers International MENA. "In Egypt we are seeing a lot of cautious prospecting with an intention to buy. While investors wait to see if a change in leadership and supporting government will herald in a new era of stability, their conviction in the country's long term fundamentals, especially in the tourism sector, will likely drive opportunistic acquisitions of hotel assets," he added. Looking at the occupational cycle in the Middle East, the second largest portion of respondents (30 percent) took the view that the market is at around five o'clock, with some minor rental falls still to occur. A further 40 percent stated that they believed that the market had reached the bottom of the cycle, six o'clock, or was showing some minor improvements having reached seven o'clock. Looking forward, respondents in the Middle East were mildly optimistic with a notable portion (40 percent) suggesting that they thought the cycle may have reached eight o'clock in twelve months' time. However, 50 percent took the view that the market would be between five and seven o'clock, e.g. still hovering around its floor.
