Market Overview

Are investors shifting their focus to property rather than gold?


Investors in the United Arab Emirates are increasingly looking at property instead of gold. In a market shift that has come as a surprise to many, property has now stolen gold's status as the most popular investment type for investors in the UAE.

According to investment specialists Hopwood House, 43% of UAE investors currently hold investments in gold as part of their portfolios. By comparison, 53% currently hold property investments. However, despite the growing popularity of property investments among the region's investors, distrust of the local property market remains strong. The UAE market has previously suffered from light regulation and a number of projects stalling during the global financial crisis.

When the credit crisis hit, the formerly exceptionally strong market in Dubai saw values plummet and many high-profile projects were left to languish half-built as developers fled. Domestic and international investors alike lost money on off-plan investments and in constructed properties that lost value. Prices are only just nearing their pre-crash peak, and while international investment is rapidly returning to the region many local investors still are not confident in the integrity of the market.

For this reason, many UAE investors are choosing to overlook their local markets when adding property to their portfolios, and instead looking at overseas investments. Overall, only 12% own properties within the UAE. Popular overseas markets are generally major cities. Examples include British markets such as London and Manchester, Australian locations such as Sydney and Melbourne, and other major cities such as New York.

With that all being said, confidence among UAE investors in their home property market is rising. This is largely driven by new and more stringent regulation being introduced by the government, who have learned from previous disasters in the market. According to data from international consultancy IP Global, roughly 57% of investors intend to buy their next property in the UAE. This includes one in three expats from Europe and the US.

New laws have been put in place, regulating both developers and finance brokers. Aimed at providing better safeguards for investors, these regulations are successfully regaining the confidence of investors in the UAE's property market as prices are once again rising at an impressive rate.

IP Global studies also revealed the full range of other investments that draw the interest of investors in the UAE at present. While property and gold remain the two most popular investment options for residents of the country, including expats from elsewhere in the world, nearly a third also hold investments such as bonds and equities or commodities.

The preceding article is from one of our external contributors. It does not represent the opinion of Benzinga and has not been edited.


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