Recently we surveyed our readers on where they like to invest it was found that most UAE residents invest in real estate (36.4%), some invest in commodities such as gold and silver (9.1%) and in other countries, people either don’t invest (36.4%) or they invest in the stock market (18.2%).
Why are UAE investors interested in the real estate market and investing over $100,000 to a million dollars (45%) in it?
When you own property as an investment you basically benefit from passive income.
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Is property market investment the best?
Warren Buffett, chairman, and CEO of Berkshire Hathaway is often quoted as saying “If you don’t find a way to make money while you sleep, you will work until you die” or in other words: If you earn enough passive income you never have to work again.
The major plus for real estate as an asset is that banks will lend money against (taking security over it) even for the average person. The fact that banks will lend to you to purchase an investment asset allows you to buy a much bigger asset than you would otherwise (just with cash) and so get better returns.
Rental returns if you use leverage can give you double-digit returns on cash, far better than anything you could get from a bank and a lot better than most other asset classes. If you do have cash and are looking to invest, putting it in real estate is hard to beat.
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Your real estate asset may appreciate in value
According to the International Monetary Fund, world real estate has gone up about 3.3% a year on average since 2000 till the present day.
Of course what can go up, can also go down. The recent real estate slump has been caused by oversupply and a lack of demand and prices have dropped making people wary about investing.
“The best way to deal with real estate prices dropping is to control when you sell and avoid panicking and dumping it at the bottom of the market,” the UAE daily National said.
Stock market options
Stock Market is the 2nd most chosen investment option according to our survey with 18.2% admitting to investing approximately $10,000 of their hard-earned money albeit they seem cautious.
“UAE bourses continue to suffer from low liquidity as many investors remain cautious,” resulting in an overall negative impact on the markets,” Jamal Ajaj, general manager of Al Sharhan Stock Center, told Mubasher.
The positive results posted by several companies for the first half of 2018 were unable to bolster the market, thus prompting no major change in liquidity levels, he told Mubasher.
Commodities, on the other hand, which 9.1% of people surveyed invest in, are said to be a great investment by Business24, an advisory site.