Challenging 2023 to force many workers into worse jobs: ILO

DESPITE weakening economic growth globally, occupier demand for industrial and logistics space remains resilient, and the lack of available space is anticipated to continue to support the sector’s performance. As for the living sector, whilst signs of slowing have emerged recently, evidenced by moderation in rent growth, long-term tailwinds favor the sector and are expected to support resilience in performance.

As a consequence, GCC investors have significantly increased activity in the sector since 2020, and with living volumes now driving one-third of global investment, the sector is expected to become a more meaningful component of their portfolios. This will not only benefit the multi-housing / build-to-rent sector, but also student housing and seniors housing. Target markets will continue to be the US and Europe, particularly the UK, where Middle Eastern investors have historically been most focused.

Within the evolving real estate investment landscape in the region, investment platforms continue to be a major source of outbound capital from the Middle East, and many of these groups are underweight in real estate and under pressure to identify opportunities to deploy capital.

The recent rising interest rate environment has led them to re-evaluate tactics with a greater emphasis on educating their investors, assessing IRRs as a metric, and venturing into new geographies, sectors, and throughout the capital stack—in particular, in debt and preferred equity positions. There is likely to be a deeper focus on M&A and strategic partnerships, where market expertise is a differentiator.

In addition to the established investment platforms in the Middle East, new entrants are emerging. Therefore, these platforms will need to be innovative to differentiate from the competition. Those with smart sourcing capabilities, strong distribution networks and an ability to acquire before syndicating will be best positioned to outperform.