Middle Eastern investors have been strong net purchasers in overseas markets in recent years. Investors from the region were increasingly active players in the global real estate markets in 2011, said Alan Robertson, CEO, Jones Lang LaSalle MENA, in a research note. In terms of capital transactions across the world's commercial real estate markets, 2011 was a significantly more active year than 2010, with the total recorded value of some $410 billion being 28 percent higher than 2010. The proportion of cross-border transactions, where the buyer is based in a different country to the property they are buying, also rose, to 31 percent. At the heart of this change was an increased focus on core, mature markets at the expense of potential opportunities in developing countries. During 2011, Middle Eastern investors were able to take advantage of continued demand for real estate in many global markets to dispose of assets they had acquired in recent years and repatriate capital to their local economies. While Middle Eastern investors remain net buyers with $4.5 billion worth of cross-border purchases, there was however a significant increase in their sales activity in 2011, as both sovereign wealth funds (SWF's) and private investment offices took the opportunity of selling overseas real estate assets. The other driving force behind the increased sales activity is the decision of some of the region's largest SWF's to more actively manage their portfolios (including the sale of non-core assets), as opposed to their previous "buy & hold" attitude. Notable sales by Middle Eastern investors included the Swisshotel Kunshan in China, which was sold by Kingdom Hotel Investments for a price in excess of $60 million and the sale by Arab Investments Ltd of an office in Stratton Street London at a price of around $95 million. On the buy side, there remained a strong appetite for overseas real estate, with total cross border purchasers by Middle Eastern investors increasing 12 percent from 2010 levels to more than $4.5 billion in 2011. Investors from the Middle East still preferred the mature markets of Europe and the Americas with very little investment into Asia Pacific real estate in 2011. Within these more mature markets there has however been a broadening interest, with purchases in Canada and Argentina (as well as the US) and in 10 different countries across Europe. The UK in general, and London in particular remained the number one destination for Middle Eastern investment in 2011, but investment into this market actually fell by 8 percent to $2.4bn in 2011, as investments were secured in other European markets such as France, Germany, Spain, Hungary, Italy and Holland. The office sector continues to be the favorite asset class and attracted 42 percent of cross-border investments by Arab investors in 2011, including KIA (the sovereign wealth fund of Kuwait) investing $485 million into an office building in Manhattan, NY. There were a number of large hotel portfolio transactions, which boosted this sector's share of total cross border purchases by Middle Eastern investors to 39 percent in 2011. The largest of these was the Intercontinental Portfolio bought by Lebanese private investor Toufic Abou Khater for $652 million. Other major hotel acquisitions included the W Hotel in London acquired by a Qatari buyer for $180m and the Marriott Champs Elysee in Paris that ADIA secured for almost $340 million. The retail sector accounted for 12 percent of total Middle Eastern transactions in 2011.
