Middle Eastern Citizens Search for a Safe Haven in International Real Estate

By: Saira Thadani

When visitors walk through New York City, you can often catch them staring up at the well-lit buildings or taking pictures of the busy traffic. The city’s foreigners seem to love the pulsing rhythm of their local counterparts. Among those fascinated with the city’s culture and glamour are foreign nationals searching for the perfect investment.

According to the National Association of Realtors, international buyers contributed over $82.5 billion of the $928 billion spent on residential real estate in the US in 2012. Members of the NAR in New York City report that they have been steadily adding international clients to their network. The largest number of purchasers, according to the Foreign Real Estate Investors Bureau, is from Western Europe. Their reasons for choosing to invest in the US are simple: economic turmoil at home pushes them to find that security elsewhere.

For Arab nationals, however, reasons to invest in homes abroad come with less clarity. The 2013 Profile of International Home Buying Activity reports that the bulk of international purchases are “single-family homes for residential purposes.” Arab nationals often choose to “stay under the radar” and remain as discreet as possible, according to Terry Naini, an Iranian-born broker in New York City.

The buyers’ desire to remain discreet is apparent through the way they handle large scale purchases such as the Chrysler Building. While the Abu Dhabi government bought a 90% stake in the building in July 2008, the management of the property was left in the hands of Tishman Speyer Properties. According to a New York Times article, the Abu Dhabi Investment Council, an arm of the Gulf emirate government, “tends to shun publicity” in general and never offered comment on their large purchase.

Similarly, when the most expensive penthouse in New York City was purchased by the prime minister of Qatar in May of 2012, he was listed as a “mystery buyer” for months. Sheikh Hamad bin Jassmin bin Jaber al-Thani bought the 100 million dollar, two story apartment in Midtown’s One57 building before before being reported as having seen it. When the sale was underway, the building’s developer, Gary Barnett, told the Daily Mail that a “very nice family” had snapped up the apartment.

According to an article in the Real Deal, New York’s real estate news source, Naini feels that it’s best not to even ask the buyer’s price range, but rather show them a few differently priced properties and gauge their interest accordingly.

Most buyers search for homes that are similar to their property in the Middle East. They seem to want to invest in an area that allows for them to not only have a place in these cities, but also reminds them of the comfort of their traditional homes. “Arab buyers often prefer townhouses or free-standing houses,” said Katherine Clark, a writer for the Real Deal. “Middle Easterners are used to having gardens or open courtyards in their homes, so they often want the same thing abroad.”

This is also true of Middle Eastern nationals purchasing property in the United Kingdom. Mark Collins, Chairman of CBRE UK Residential, explained that “relationships with Middle Eastern buyers are based on trust and integrity.” During his 30 years in the field, Collins has found that these buyers focus on the “Golden Postal Codes,” or property in the prime parts of London such as Knightsbridge and Mayfair.

“Initially, most middle eastern investors were looking for a safe haven and often also a one-bedroom apartment for their child going to college here,” said Collins. “But now that has changed to more than two bedrooms as they want a luxurious space for their family to get together.”

When searching for homes, they often look for a “very prestigious property with high quality building structure that is the best in security with an extremely high quality concierge service.”

“They want their doorman to be the kind to remember their names,” said Collins. “Middle Eastern buyers are happy to pay whatever charge, but they want to have the best services, even above a five-star.”

Just as the buyers expect these personal touches in prospective buildings, they desire the same from their real estate agents. According to Safina Ahmad of CBRE UK, they attempt to make their clients as comfortable as possible through more than just phone calls.

“We go to Doha at least five times a year,” she said. “We pride ourselves on this professional and personal connection and it is normal for us to spend time getting to know the buyers.”

Agents are also mindful in making an effort to show these clients a respect for their culture.Through more than just visits, companies like CBRE UK attempt to gain a greater understanding of the investors’ needs. CBRE understood that some women in the Middle East may need a private meeting or event in order to ask questions and gain a better understanding of their potential new home.

“We hosted a ladies-only event in Abu Dhabi about 8 weeks ago,” said Ahmad. “Women in the Middle East are becoming increasingly educated and vocal when it comes to property investment.”

In an article published by PropertyWeek.com, Ahmad explained that in the past 2 years, her major sales on prime London residential property have been made by two Saudi Arabian women . “As women have started to take leading roles in investment decisions, we thought it right to start engaging with them directly,” said Ahmad.

“We are certain that Middle Eastern women are destined to become key players in the global property market.”