It must be said that the UAE commercial market has a way to go, in order to catch the likes of London´s West End or indeed the better heeled arrondissements of Paris in terms of attracting the plethora of investment funding currently floating in and around Europe; but it has its advantages. For example, the healthy percentage of new stock in the local pipeline; infinitely more difficult to introduce into long established and tightly configured European CBD´s, which are subject to stringent and elongated planning processes.

Colour the latter position with budgetary considerations, firmly under the microscope, in this day and age of rapidly inflating cost of build. Add the exacerbation of a credit squeeze in Europe courtesy of the fall out from Sub-Prime and you encounter the likelihood of a good deal of planned construction being placed on hold. Thus availability of space has dwindled considerably in prime time Western Europe, with for instance, the void rate of ready to occupy space in London down to 2 and 4 per cent. Conversely, with the Middle Eastern countries currently basking in a bubble bath of petro-dollars and at a much earlier stage of the commercial real estate cycle, few ongoing developments are likely to be curtailed.

It is true to say that Europe is now reeling in a more significant slice of Middle Eastern money, 9 Billion Euros worth in 2006 to be accurate and a rising Arabian investment barometric ongoing in 2007. With a further indeterminate cloud of Mid-East Euro-zone investment more difficult to quantify in real terms, as much of it arrives indirectly through funds. However, compare these figures stemming from the Arabian Peninsula with the length and breadth of a strong overall European investment market amounting to 225 Billion Euros in 2006 and 184 Billion Euros to the end of Q3 in 2007 and one gets a feel for the magnitude of what might be. London and Paris, incidentally, account for a third of this activity.

In contrast, the frequency of institutional visits to the UAE has risen dramatically to three or four times per annum, which undoubtedly indicates the growing interest in our own back yard. Regardless of escalating visitor count, as Nick Maclean Managing Director of CBRE Middle East points out, constraints still exist at the moment. ´There are currently 23 investment zones that offer title in Dubai; therefore while allocation of institutional funds is in place, they do not physically yet have the stock to invest in. This of course is frustrating in the sense that we as CBRE cannot satisfy a clear demand.´ He continues, ´The European market has been five to ten times oversubscribed for the past ten years, more than half the requests received from investors´ amount to, ´Where should I put my money elsewhere in the world?´ ´What do you answer? Take a risk, the Asian economies are in motion, for instance India is challenging most established economies and there is clearly interest in the Middle East.´ Nick refines the possibilities, ´Core investors find it difficult to identify the assets, and the foundation of this difficulty is obtaining top quality information. The UAE Government occupies a third of all stock and to buy a building that is occupied by the Government would represent a very attractive proposition to an external investor. While the administration continues to put good legislation and regulation in place, reaching the stage of making their own stock available would have a significant effect on investment. A good quality investment of this type in London for example would attract between 5 to12 serious bidders.´

Much of the liquidity arising from an oil price that has risen from 50 to touching 100 dollars a barrel in the space of a year has been directed to the Middle East region. Dr Nick Axford, Executive Director, Head of Research CB Richard Ellis Ltd EMEA, comments, ´Regionally based investors have tended to overweight their investment in the GCC, although there is an apparent pace of change in this respect. In order to counterbalance that factor, cross border investors need to be in a position to obtain a tangible portrait of liquidity and observe an encouraging level of transparency within the markets they are examining. Fundamentally their requirement boils down to good quality information which is underwritten by a sound research process.´

Axford continues, ´Reversing the process, the more experienced Middle Eastern investors are now looking at asset management potential as opposed to trophy real estate in Europe. However, with this trend toward ´drier´ assets in order to invest successfully in prime priced products they require access to knowledge and expertise on the ground. For instance, Sovereign entities like the Abu Dhabi, Qatar and Kuwait Investment Authorities and high net worth individuals in Saudi Arabia who are heavily entrenched in globalised investment make extensive use of that capability. In fact we have been invited here to talk to two significant investors in Abu Dhabi about the opportunities in the European and British markets over the next six to eight months.´

The theme which emerges from this debate is the ongoing embellishment of the route map toward global omni-directional real estate investment. In the case of the Middle East only 9 per cent of direct investment in the past 12 months finished up outside the region, but it´s a proportion which is predicted to rise substantially in 2008. We have already seen a flurry of outward acquisition in the latter part of December. The rise in European investors in the GCC is likely to continue, as a weakening dollar serves to enable cheaper hedging of risk. Nevertheless additional incentives, in the sense of expanded title bearing stock investment opportunities and a continued commitment to the pragmatic implementation of cogent market transparency policies, remain a priority.

The CBRE Overview Europe and London presentation was delivered on the 11th of December 2007 by: Dr Nick Axford, Executive Director, Head of Research CB Richard Ellis Ltd EMEA, Richard Wonack, Senior Director, CB Richard Ellis Ltd and Rupert G. Williams, Director CB Richard Ellis, City.