Global Investors Hit Pause but Stay in Play Amid Middle East Risk

Global commercial real estate investors suffered a slight slowdown in early 2026 as global events, mainly triggered by the ongoing conflict in the Middle East, have started to affect energy prices, caused an uptick in inflation and started to bring into question the sustainability of the global economy. According to a recently released report by global real estate expert Savills, the total commercial real estate investment globally in the first quarter of 2026, dropped by a 5% monthly decrease to $230 billion, its lowest figure in the last quarter.

Transactions are postponed and investors are taking a more cautious approach but this does not mean they are leaving the market. Some large transactions are pending and the investor interest in alternative commercial properties is intact.

The pause in commercial real estate investment by global investors today is short term. They are simply taking a time out to re-assess risks in the event that things may further deteriorate in the short term, but will return to invest in real estate soon. In the interim, the fundamentals of real estate will continue to drive investment decisions. As was the case following the 2025 US tariff disruptions and subsequent trade disputes, when there was a temporary pause in investment in commercial real estate by global investors, there was a later rebound as investors returned to invest in real estate and this is what we anticipate to happen today.

However, globally the real estate investment landscape remains very uneven with some markets growing at a tremendous rate whilst others are struggling. For example, the US real estate market for global commercial investors is rising dramatically with a 19% year-on-year increase. This growth is specifically attributed to the office space sector as well as industrial properties. On the other hand, the real estate investment landscape in Europe declined by 5% year-on-year. Although some European emerging markets have recently attracted significant capital inflows globally, the bulk of investment is currently concentrated on regions that offer obvious cash flow. Multifamily properties and healthcare-related facilities are currently the preferred choice among investors globally.

However, there is a reality that is being constantly over-looked worldwide – new supply is scarce. The reason for this can be attributed to higher construction costs and the costs of financing a project. This lack of supply in the market will translate into supporting rental growth in the medium to long term, even if immediate demand drops due to current uncertainty in the market.

As energy prices fluctuate, and interest rates become increasingly unpredictable, it is increasingly important for investors to consider the impact that both higher oil prices, and greater volatility in interest rates may have on transactions in the short term, as well as on their investment returns in the longer term. The market’s performance will continue to be very sensitive to developments with respect to energy supplies, and to efforts to contain any further economic shocks.

What This Means for Your Portfolio:

1. Instead of tracking the number of transactions that have taken place, track the number of pending deals on platforms (e.g. Dubai DLD reports) to take the pulse of the market.
2. Geographical regions as well as property sectors with proven long term demand should be at the focus of a strategy going forward, be it in terms of a purchase, or as a key factor for an increased development. Residential, by way of new supply in the area of development, and well performing commercial sectors within industrial growth zones would be an example of such in Dubai, say multifamily, health care and new Logistics spaces, and communities.
3. When establishing a development investment strategy allow for the financing costs of geopolitical risk to impact your investment return and allow for extended periods of time in order to arrive at a holding cost and make a smart decision regarding a development opportunity.
4. Choose to select a property under development from a proven reliable developer that has a good track record of delivery to minimize the exposure to the developer.

A New Normal for Real Estate Investing?

The global investment landscape has become one of extreme volatility and subject to constant change. In such an environment, patience is a significant asset, and, more than ever, discipline in the property investment process is critical. Rather than the question of whether or not to invest, the far more relevant and pressing question now is that of ‘how’ to do so in a manner that is to deliver optimal returns in the face of an all too frequently changing and increasingly complex set of circumstances.