61 Percent of UAE's Ultra Wealthy Set to Invest in Global Real Estate in 2016

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London, New York and Dubai Identified as Preferred Investment Destinations
 
International real estate consultant Cluttons is reporting this week that despite global economic volatility over the past year, which contributed to multiple downward revisions for growth forecasts, investment appetite among UAE High Net Worth Individuals (HNWI) does not appear to be dented, with 61% confirming that they would most likely invest in their top target city during 2016.
 
Cluttons' 2016 Middle East Private Capital Survey, in partnership with YouGov, shows that London, which has historically been an investment magnet for Middle East HNWI, has emerged alongside New York as the top investment location outside the Middle East for UAE HNWI in 2016, while Dubai has been identified as the preferred location within the Middle East.
 
Steven Morgan, Chief Executive of Cluttons Middle East commented, "The strength of the US dollar, to which the UAE retains a fixed peg, has certainly contributed to the strong appetite for global property investments, particularly in the face of mute local and international economic conditions, which have been traditional triggers for capital flight to perceived investment safe havens."
 
"With investment safety at front of mind for HNWI, London is just ahead of New York as the most preferred city for investment. However, our survey shows that New York appears more frequently in investors' top three preferred cities for investment in 2016", he added.
 
According to the report, London has been an investment destination for Gulf buyers for many years, a trend which is expected to continue, with growth of average residential property prices expected to reach the 2.5% to 3% mark for prime Central London as a whole in 2016.
 
Cluttons data also shows that, whilst residential property remains the most attractive investment asset for UAE HNWIs, interest in commercial property continues to remain strong with 22% of UAE HNWIs surveyed indicating a preference for offices as an investment class.
 
Faisal Durrani, Head of Research at Cluttons said, "Despite tightening yields in London's office sector, which currently stand at 4.8% in Central London, when compared to office yields of circa 7% to 10% in Dubai, contract strengths play a significant role in driving inward investment into London's office market."
 
"Whilst lease terms in Dubai are typically between one to five years, lease lengths for London offices generally start at five years and often continue up to as long as 15 years, offering the security of a longer tenure. Moreover, the availability of investment grade stock is far more abundant in London than it is in Dubai. However, this appears to be changing slowly, with the sale of the Standard Chartered building in Downtown Dubai as a recent example", Durrani added.
 
According to Cluttons, UAE HNWI respondents also reported that locations within the Middle East are among their top three investment targets over the next 12 months, with Dubai and Abu Dhabi being the most popular locations in the region for investment.
 
"30% of UAE HNWI investors name Dubai in their top three most preferred cities, followed by Abu Dhabi at 23%. Dubai is both the leading target investment location as the 'most preferred' city as well as the most commonly mentioned city in investors' top three preferred locations in the Middle East", Durrani concluded.
 
Carried out in partnership with YouGov, Cluttons Middle East Private Capital Survey investigates investment trends and behaviors of the GCC high net worth individuals who either have made or intend to make an investment of USD 1 million or more in international property.