Savills expects further Middle East investment from China and east Asia

The Middle East is expected to receive further investment from China and countries in east Asia, largely driven by funding from the Belt and Road Initiative, according to experts.

China spent $71.1 billion (Dh261bn) between 2014 and 2017 in the Middle East as part of the initiative. It has also pledged to invest $10.7bn by 2022 in Oman’s Duqm Special Economic Zone.

“Trade wars could also affect how and where investments are made. Savills’ report shows how China now plays a significant role in the Gulf and North African regions,” Murray Strang, head of Savills Dubai, said in a webinar titled Trade Wars and Risk.

“This investment trend from China... [and] also [from] far east Asian countries is expected to further increase in the region as they recognise the strong value of the market and its fundamentals.

“For instance, recent major deals completed in the UAE such as Amazon/Souq and Uber/Careem are testament to the opportunities the market can offer.”

In 2019, the UAE was the largest foreign direct investment recipient in the sub-region, with flows of almost $14bn, growing by a third from the previous year, largely owing to major investment deals in oil and gas, according to Savills.

Capital flows to Saudi Arabia also rose by a further 7 per cent to $4.6bn last year as the kingdom improved its investment environment and boosted economic diversification .

Several large non-oil investment deals took place in 2019 including the launch of a $1bn greenfield project by China’s Pan-Asia Pet Resin, a plastic bottle supplier, in Jazan City.

Investments in Egypt, Bahrain and Oman are also increasing thanks to government policies to encourage foreign direct investment in various sectors.

Oman has set out laws governing public-private partnerships, privatisation and foreign capital investments, with the aim of creating a more favourable regulatory environment.

In the meantime Bahrain is allowing full foreign ownership of companies involved in oil and gas drilling.

“The Middle East has traditionally been a net exporter of capital,” said David O’Hara, head of Savills in Saudi Arabia. “Sovereign wealth funds and private equity have been some of the biggest investors into equities and trophy real estate assets over the past decade.

“However, in the past few years, governments in the region have been encouraging foreign inward investment to drive growth and diversify their economies”.

Fareed Rahman