Real estate and private equity take the lead in Middle East financial institutions (FIs) portfolio, according to Preqin, a London-based alternative assets data provider. An alternative asset is an investment in any asset class excluding capital stocks, bonds, and cash.
The UK-based investment data company identified some of the trends emerging from its Middle East investor surveys conducted across 2022, 2023, and 2024: Real estate stood out over the period under review, with the percentage of investors allocating 20% or more of assets under management (AUM) to the asset class doubling compared with 2022.
This jump saw real estate claim nearly half of the survey group in 2024, compared to less than a quarter in 2022, Preqin said.
Private equity was also preferred by investors, as 47.8% of institutions surveyed had 20% or more of their assets invested in 2022 but allocations dropped to 36.7% in 2024. Almost a third (29.6%) of institutions held no Venture Capital investments at all in 2024.
The report also found that FIs in the Middle East continue to hold a higher allocation to alternatives compared to their global counterparts. In 2024, nearly a third (31%) of respondents reported holding 41-60% of their assets under management (AUM) in alternatives, a trend consistent over the three-year period.
When it comes to geographic locations, Europe and North America remain dominant destinations for Middle Eastern investments. However, the number of investors with no exposure to Middle Eastern assets dropped from 20% in 2022 to just 7.1%in 2024. And the interest in allocating a larger portion (41-80%) to the region is growing, Preqin said.
The Middle East is now seen as the most promising emerging market in the near future. Saudi Arabia emerged as the most attractive market within the Middle East, with 96.5% of FIs in 2024 selecting it for potential investment. The UAE also garnered significant interest with 41.4%.
