Why Middle East more investors US property deals for lucrative

Photo : Reuters

Middle East investors are poised to ramp up their real estate investments in the United States over the next 12 to 24 months, capitalizing on declining property values amid the backdrop of rising interest rates, analysts suggest.

The US has aggressively hiked interest rates over the past couple of years in a bid to curb persistently high inflation and mitigate living costs in the world's largest economy.

However, this tightening monetary policy has had repercussions on the US real estate sector, with property owners facing challenges in servicing loans amidst higher interest rates. Consequently, many have been compelled to offload assets at discounted prices to refinance maturing debt obligations.

Stay informed with the latest news. Follow DXB News Network on WhatsApp Channel 

Fadi Moussalli, Executive Director and Head of Capital Markets and International Capital Coverage of Mena at JLL, highlighted the emergence of distressed opportunities due to refinancing hurdles and reduced office occupancy levels amid the surge in remote work following the Covid-19 pandemic.

Middle Eastern investors, including sovereign wealth funds and family offices, are expected to seize upon the current market conditions and expand their footprint in the US real estate sector, analysts note. Moussalli emphasized that investors from the Middle East are actively seeking access to quality deals that were previously deemed either too expensive or inaccessible.

The GCC economies, buoyed by higher oil prices, boast surplus liquidity, enabling investors to pursue new investment avenues.

Dar Global, the global arm of Saudi Arabia's leading developer, Dar Al Arkan, recently announced its intentions to acquire properties in New York and Miami, signaling increased interest in the US market. Ziad El Chaar, Chief Executive of Dar Global, highlighted the attractiveness of the Miami market, which is now drawing investors from various parts of the world.

Bahrain's GFH Financial Group disclosed investments totaling $450 million in the US real estate sector between the fourth quarter of 2023 and the first quarter of 2024. These investments include $300 million in student housing and $150 million in acquiring medical clinics.

Investcorp, in collaboration with two sovereign wealth funds, is set to establish a $526 million fund targeting industrial real estate investments in the US.

Similarly, Kuwait's Kamco Invest anticipates lucrative opportunities for investors in the US property market in 2024, with attractive price entry points emerging in the recovering market.

Arcapita, based in Bahrain, eyes further investments in the US real estate sector, particularly in industrial and data centers, as well as rental apartments. The commercial real estate market is undergoing distress, driven by decreasing tenant demand in retail and office spaces due to the rise of online shopping and remote work trends, respectively.

In the fourth quarter of the previous year, the national office vacancy rate reached a record-breaking 19.6%, underscoring the challenges facing the sector.