Gulf investment in US real estate surges

Gulf investors from sovereign wealth funds to rich individuals increased spending on U.S. real estate, attracted by the pace of economic growth, a survey by Jones Lang LaSalle Inc. showed.

Gulf Cooperation Council countries invested $1 billion in U.S. property this year, a 51 percent gain over the year-earlier period, according to the survey released in Dubai today.

“It’s about grabbing a share of the American economy, which has been recovering consistently and effectively since 2011,” said Fadi Moussalli, Jones Lang’s regional director for the Middle East and North Africa. Investors see the U.S. as being “somewhere in the middle of the recovery cycle.”

Wealth funds and institutional investors are spending more on real estate to diversify their holdings, Jones Lang said. The U.S. economic recovery is attracting the attention of GCC investors who are traditionally more accustomed to London and the rest of Europe.

Texas, California, Washington and Massachusetts have attracted the majority of property transactions completed this year, according to Moussalli. Gulf investors favor multifamily homes and residential compounds where they can improve yields before selling the assets, Moussalli said.

The U.S. economy expanded at a 3.5 percent annualized rate in the three months through September, following a 4.6 percent gain in the previous quarter. That’s the best back-to-back increase for U.S. gross domestic product since 2003.

“All indicators of the U.S. economy are green and that makes it appealing,” Moussalli said.

Asia remains the most underrepresented in terms of investment from the six GCC states of Saudi Arabia, Kuwait, the United Arab Emirates, Qatar, Bahrain and Oman.

“The elite of the GCC tend to send their kids to study in the U.S. and the U.K. so they are used to these countries,” Moussalli said. “Usually those elite are the decision makers and the investors of wealthy families and they tend to go with their comfort zone.”-Bloomberg