Gulf and Middle Eastern investment into New York City property is expected to rebound in the coming months after dropping significantly during the Covid-19 pandemic, according to analysts and real estate experts.
According to data from JLL Research, over the past 19 years, Middle Eastern capital has accounted for over $23 billion in volume in New York City. Since 2005, Middle Eastern investors have invested more capital in NYC than the next 15 most liquid markets in the US.
However, year-to-date Middle Eastern investment into New York – a longtime favorite of Arab investors – has fallen 60 percent, largely as a result of the pandemic.
“The pandemic has affected investment activity in virtually every market and New York City is no exception,” said Riaz Cassum, JLL’s senior managing director, capital markets and global head of international capital coverage. “We expect to see activity pick up again once travel restrictions are lifted and there is more clarity on the economic recovery overall, and in New York City in particular.”
The JLL Research data shows that, across the city, Middle Eastern investors have historically invested in office and hotel properties, representing almost 90 percent of investment activity between 2005 and 2020.
Riaz Cassum, JLL’s senior managing director, capital markets and global head of international capital coverage
The bulk of investment activity has centred around Midtown Manhattan, the largest central business district in the world. JLL’s research shows that investment is particularly heavy in the ‘Plaza District’, a busy commercial area totaling approximately a square kilometer between the city’s 42nd and 59th streets, from 3rd avenue to 7th avenue.
In a separate interview, Anthony Ritossa, the founder and chairman of Ritossa Family Office, said: “Middle East investors are now more bullish than ever on the city’s future potential, especially in terms of real estate investment opportunities.”
“It’s a great time to invest due to the availability of inventory, low interest rates and the softened real estate market,” Ritossa said.
“Some residents and businesses left NYC during the initial phase of the coronavirus pandemic first hit, and as a result select real estate projects were paused,” he added. “Now that the vaccine is available, it is clear that there is a positive path forward and the real estate market is poised for a strong come back. New York is always resilient and bounces back, even in the face of adversity.”
Additionally, Ritossa (pictured below) said that “more Middle East offices than ever are investing in US real estate, including in New York City, as a way to diversify their portfolio”.
“I see strong interest in this sector from wealthy Middle East investors who made their fortunes elsewhere and now seek to invest in new areas, for example,” he added.
Looking to the future, both Ritossa and Cassum said they were confident that Middle East investment into NYC would bounce back to pre-pandemic levels.
“NYC will always be a target market for ME investors, even as they look to invest in growing sectors such as logistics outside of NYC,” Cassum said. “We expect the interest in office and hotel properties in NYC to continue into the future, especially once the market stabilises.”
In October, data from JLL Research indicated that that the acquisition volume of Arabian Gulf investors fell 78 percent year-on-year between 2019 and 2020, compared to a 43 percent among other cross-border capital sources.
Cross-border inbound investment stemming from Middle Eastern investors averaged $2.2 billion between 2017 and 2019. Total Arab investment, however, remains small when compared to other capital sources, comprising a total of 4.2 percent of the acquisition volume since 2017.
Year-to-date investment from the Gulf into major US city has fallen 60%, according to JLL Research
European and Asian capital, by comparison, makes up just under 25 percent of the buyer pool, while Canadian investors make up nearly half.
The data from JLL Research, however, shows that compared to their international peers, Arabian Gulf investors tend to focus on larger, higher-profile single asset acquisitions.
The average single asset transaction for Arabian Gulf investors, for example, was $80 million, compared to $49 million from other global capital sources.
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