INVESTOR sentiment is suggesting that in the next one to two years, the United Arab Emirates (UAE) will have the world's "best performing" real estate market and Saudi Arabia the "next best".

The Middle Eastern markets are expected to significantly outperform all other regions, found property consultancy Jones Lang LaSalle (JLL) in a survey conducted at the recent Cityscape Dubai 2008 expo.

Its Investor Sentiment Survey covering over 350 developers, sovereign wealth funds and high nett worth individuals was undertaken in the aftermath of the collapse of the United States investment bank Lehman Brothers and thus reflects up-to-date investor sentiments, said JLL.

Markets that are coming under the investment spotlight are the UAE capital of Abu Dhabi as well as Saudi Arabia due to their large and rapidly urbanising population and new legislation that permits their real estate sectors to open up.

Qatar is also building on its reputation as the "emerging best performing" Gulf Cooperation Council market.

However, JLL said fewer investors expect Bahrain, Kuwait and Oman to perform as strongly.

The consultancy's head of investment transactions for the Middle East Ian Ohan said the Gulf region offers strong relative international value and that buyers are actively looking for properties capable of generating yields of eight to 8.5 per cent for commercial assets and higher for hospitality products.

"Investors are seeking strong capital growth in Abu Dhabi, Saudi Arabia and Qatar, reflecting their robust economic growth potential and nascent stages in the real estate cycle," he said.

"The issue of market transparency is high on investors' agenda and this is being addressed via government initiatives such as the enactment of international best-practice legislation and enforcing strong corporate governance."

As more global investors survey opportunities in the region, JLL said many Middle Eastern investors themselves are beginning to look outwards with enthusiasm in order to take advantage of difficult conditions elsewhere.

Among the areas that stand to benefit from their export of capital is Asia Pacific, which over 20 per cent of the respondents believe will be the best performing region.

North America too could be under scrutiny for value buys over the next year or two once its economic outlook strengthens, they felt.