Mr. Muhammad Habboosh Accounting & Finance
WANT TO INVEST IN UAE
As we all know, COVID-19 has caused severe damage to the world in all fields starting from locking people at homes to major investments such as airplane business, car factories, or oil production. The United Arab Emirates is part of this world and, needless to say, businesses in this country have been affected, too. But, what about businessmen or average people who have savings and want to invest in the UAE? What fields should they look into? In this article, three sectors will be suggested for investment in 2021.
The first and most reliable sector is real estate. UAE is one of the fastest-growing countries in the world. With new projects built or will be built on the market, it will be wise for investors to start having their own property. The price of their property will increase with time, and investors can re-sell with much higher prices than what they have paid for. Also, people who work in the UAE and plan to stay for a long period of time, will see this as a great opportunity to buy their own apartment. Having an apartment will make them feel more secure in the country, and they will not have to worry about their rent. Also, they may rent out their property to others and use this money for their daily needs. Apart from that, once they decide to leave the country for any reason, they can simply sell their property and gain their capital back with a reasonable profit. Some say that this can be a long-term retirement plan. According to Nair (Gulf News, September 30, 2020), property prices are 40% less in 2020 than prices in 2014. In a recent article in the Gulf News dated February 11th 2021, Varghese states that properties in UAE are very attractive for buyers as they can receive low mortgage interest rates, higher loan to value ratio availability, affordable prices, reduced service charges, and developer incentives such as service fee waivers and free appliances.
The government have also given some incentives to customers such as the ten-year property owner's visa and retirement visa program, and tax-free property offer. Not to mention the safe environment for individuals and families. As we speak about UAE properties, we can’t ignore the worldwide event “Expo 2020,” which will significantly boost prices up. According to Properstar (2021), analysts are sure about the positive effect of the Expo 2020 event in the country as they studied the previous effect in other countries in the past. In China, for example, property values increased 46% more since Expo 2010. The same situation happened in London, where prices rose 64% between 2012 and 2017 because of the Olympics sports event. And don’t forget the sunny weather throughout the year.
The second important sector is the stock market. Choosing reputable companies with strong records or big banks should be the right choice. Once the market goes up, investors may sell their shares with profit. Another alternative is taking annual dividends, which I believe, is much better for starters and long-term investors. However, keep in mind that investing in the stock market is not a game. It can make people extremely rich or completely broke. So, whoever wants to pick this option should choose carefully, invest wisely, and wait patiently. A good study for strong reputable companies is highly recommended. Also, it is important not to borrow from banks to invest in the market. Another piece of advice is that between 10% to 30% of unneeded money should be invested. This way, if shares are not doing well, there is no rush to sell at low prices or loss. Another investment sector is what is called Investment Funds. Banks in the UAE have such facilities. Investment Funds are divided into two types: Global Sukuk Funds and GCC quantity fund. Global Sukuk Funds invests in global stock markets such as American, Chinese, and European, while GCC quantity fund invest in the gulf stock markets. Open an account with any of the banks and let them do the job for you. Either way, you will be earning some money. This is good for people who don’t have experience in investments. The only problem here for some people is that most of the time, the profit is not attractive, but others accept this fact as long as the capital amount is guaranteed by the bank.
To conclude, please note that investment, in general, is a risky field, and you need to understand that very well. Make sure you can afford the loss mentally and financially. On top of that, never take loans from banks to invest unless you are putting your money in property. Use your own saved money instead. It is a fact that no one knows the future, but with a bit of studying the current situation, reading business cycles throughout modern history, courage and planning, investors will surely be more successful to earn a good amount of money than others who kept their money in banks. And as life has taught us “crisis makes miracles.” Good luck!
Nair, M. (2020). Dubai property prices at 'fair value', but European cities in bubble territory, says UBS: For buyers, this could well be best time to enter, but will they?, Gulf News, September 30, 2020. https://gulfnews.com/business/property/dubai-property-prices-at-fair-value-but-european-cities-in-bubble-territory-says-ubs-1.1601454334029 Access date: 4th March 2021
Properstar. (2021). Why you should buy Dubai property before Expo 2020: True advantages that can make you decide for investing in Dubai real estate. https://www.properstar.com/buying-property/uae/why-buy-in-dubai-before-expo-2020 Access date: 4th March 2021
Varghese J. (2021). COVID-19: No better time for UAE expats to enter the real estate market:
A detailed look at the rationale behind investing in property now amid the pandemic. Gulf News, February 11th, 2021. https://gulfnews.com/your-money/saving-investment/covid-19-no-better-time-for-uae-expats-to-enter-the-real-estate-market-1.1606141446605 Access date: 4th March 2021