Middle Eastern Sovereign Wealth Funds May Reduce London, England Real Estate Investment to Prioritize Domestic Infrastructure

Written by:

Rudi Davis

Date:

17 Apr 2026

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Middle Eastern sovereign wealth funds, long major investors in London, England commercial real estate, may soon redirect capital as geopolitical and economic pressures rise at home. According to Azeemeh Zaheer, Director of Structured Finance and Capital Advisory at Colliers, decisions by funds from Saudi Arabia, Kuwait, Qatar, and the UAE will influence capital availability in London and other global real estate markets over the next 12 to 18 months.

“I’m watching mostly to see what the Middle Eastern capital is going to do,” Zaheer says. “Traditionally, in places like London, we are the biggest recipient of capital from Saudi Arabia, Kuwait, Qatar, and the UAE. They own much of the city in London.”

This potential shift comes as several Middle Eastern economies face financial losses and infrastructure damage. Qatar recently suffered a $20 billion loss at its LNG facility. The UAE, despite a diversified economy, lost an estimated $1 billion daily during recent disruptions. Kuwait has halted oil production, cutting off a key source of state revenue. These setbacks increase the likelihood that sovereign wealth funds will prioritize rebuilding domestic infrastructure over acquiring new foreign real estate assets.

Financial Pressure on Funds

Zaheer points to the scale of recent losses as a key factor shaping investment strategy. Qatar’s LNG facility, a major revenue source, sustained $20 billion in damage. Kuwait’s shutdown of oil production has eliminated inflows to its sovereign wealth fund. The UAE’s daily losses during recent instability have added further strain.

“Qatar has this 20 billion loss in their LNG facility,” Zaheer says. “Kuwait has shut down. They’ve completely closed, so the state isn’t receiving any revenue. Their sovereign wealth funds have been major landowners not just in Europe and London, but around the world.”

Infrastructure damage adds to these pressures. Zaheer notes that Kuwait’s new airport, which took over a decade to build, was bombed more than 25 times and will likely require extensive reconstruction. Similar challenges affect other regional infrastructure projects.

Faced with these losses, sovereign wealth funds must decide whether to continue investing abroad for diversification and income or redirect resources toward domestic rebuilding. The decision will depend on each country’s long-term needs and alternative revenue sources.

Shift to Domestic Investment

Zaheer suggests that Middle Eastern countries may adopt a more protectionist investment approach, prioritizing domestic infrastructure over international assets. This strategy would reduce capital flows into London and other global real estate markets.

“The question is, are these big flows of capital outside going to stop?” Zaheer says. “Are they going to focus more on internal infrastructure, or will they look for income-producing investments abroad so they’re not fully exposed to domestic risk?”

London is particularly exposed. Middle Eastern sovereign wealth funds are among the largest buyers of prime office buildings, luxury residences, and mixed-use developments. If this capital declines, sellers may need to find new buyers, likely at lower prices, while developers may delay or cancel projects.

At the same time, these funds must maintain income streams to support domestic economies. If foreign real estate investments remain a key source of cash flow, some capital may continue to flow abroad. However, if reconstruction costs rise further, funds may need to repatriate capital, reversing a decades-long trend of global real estate investment.

Rising Costs for Developers

Beyond capital flows, instability in the Middle East is driving global commodity price volatility, particularly in oil and gas. These changes increase construction and operating costs for real estate projects worldwide, as petroleum-based products are embedded in materials and logistics.

“If we live in a globalized world, we have to play differently,” Zaheer says. “As inflation rises, prices will increase, and interest rates may not stabilize.”

The shutdown of oil production in Kuwait and damage to Qatar’s LNG facility are already affecting supply chains. Developers face higher material and transportation costs, reducing margins and increasing project risk. Borrowers who secured low-interest loans in 2021 now face added pressure as inflation raises operating costs and complicates refinancing.

Zaheer adds that these effects extend beyond the Middle East. In Asia, countries such as the Philippines have halted gas imports, leading to shortages and price increases. These disruptions contribute to global inflation and will continue to affect real estate markets as supply chains adjust.

Capital Flows and Market Impact

The direction of Middle Eastern sovereign wealth fund capital over the next 18 months will shape global real estate pricing and liquidity. If funds continue investing internationally, cities like London may see stable demand and pricing. If capital shifts to domestic priorities, reduced foreign investment will shrink the buyer pool and pressure sellers to adjust expectations.

Zaheer’s team at Colliers is advising clients to prepare for this uncertainty. They are helping sellers identify alternative capital sources, including U.S. private equity and European institutional investors, and structuring deals to match different risk profiles.

For market participants who rely on Middle Eastern capital, the message is clear: past demand may not continue, and competition for capital may increase.

“I think it’s a dynamic thing, and it’s constantly changing,” Zaheer says. “But that’s one of the foreign capital flow factors I’m watching closely.”

Looking ahead, decisions by Middle Eastern sovereign wealth funds will influence not only London’s high-profile developments but also broader global real estate trends. Sellers and developers should monitor these shifts and adjust strategies to a market that may look very different from the past decade.