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The Rise of Middle Eastern Investment in Luxury Real Estate

Luxury real estate experts have been predicting growth for Middle Eastern investment in U.S. markets for the past couple of years. Ongoing turmoil in the Middle East is one of the main reasons for the anticipated growth. Families are looking for safe relocation. The U.S. offers this for them along with desirable luxury properties in hot markets like New York City, Miami and Los Angeles.

Earlier this year, the Miami Association of Realtors announced that Turkey is among one of the top 10 foreign countries bringing traffic to their website in search of local properties. Many buyers from the region are likely to make a move to another country within the next decade. The U.S. is purportedly one of the countries where these buyers have the greatest interest when considering luxury home purchases abroad.  

World Markets Indicate a Shift to U.S. Real Estate

The anticipated U.S. interest from Middle Eastern buyers shouldn’t come as a big surprise. If you’ve been in luxury real estate for any time, you know that demand and supply is driven by global factors outside of the real estate industry. The market is simply reactive to these factors.  Middle Eastern economies are changing to better accommodate international cash flows, especially in countries like Saudi Arabia, Bahrain, Kuwait, United Arab Emirates, Qatar and Oman. Investors who previously felt no need to invest abroad are now doing so in droves.

London, traditionally a hot spot for Middle East real estate investment, has experienced some economic instability because of Brexit. Other parts of Europe that have been attractive to the Middle Eastern buyer like France are experiencing economic instability as well. Confidence in Europe, especially its real estate market, is fading in favor of the U.S.

Middle East Buyers Are Looking for Luxury Properties

This is good news for the U.S. luxury real estate market. Middle Eastern investors have shown a great deal of interest in expanding their portfolios beyond Europe or Asia.

The high-net-worth buyer from the Middle East is typically younger than a high-net-worth buyer in the U.S. The age range of these buyers is between the late thirties and early forties. Their average wealth is $6.1 million USD. These buyers are married with children and they most likely grew up in affluent households. Family is extremely important so they will often opt for homes that can accommodate a large extended family. They may also purchase more than one home in the same area to have extended family nearby.

Another key differentiator of the Middle East buyer is that a property purchase in the U.S. is most likely not their first purchase abroad. The U.S. purchase is more likely to be a third or fourth luxury home. Often, this will be a vacation home, which is perhaps why the Miami market, a key vacation destination, is seeing such high interest from Middle East buyers.

Oversaturation of the Home Market

There’s been an oversaturation of the luxury real estate market in the Middle East. Luxury real estate markets located in the Middle East, especially those in countries like Saudia Arabia and the United Arab Emirates, have been besieged by potential buyers from all over the world for the past decade and a half. Exemplified in monolith creations like the Burj Khalifa, the once booming place for building real estate portfolios has since been exhausted by the international luxury real estate community.

Rather than competing for investments at home, it only makes sense for wealthy Middle Easterners to buy overseas as well, especially in foreign markets where geopolitical tensions are minimal like the U.S. Targeting the Middle Eastern buyer for your luxury listings only makes sense.

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