The UAE does of course give many expatiates the opportunity to make –and therefore save – a great deal more capital than they would in their home country. Those with the foresight to do so, often choose to invest in savings plans or perhaps even the global stock market (depending on personal appetite for exposure to risk).
Property too is a traditional (and historically safe) asset class of appeal for those looking to make their extra earnings work for them, with one eye on the future.
However, the UAE property market is not seen as representing any kind of value to seasoned investors. The unfortunate pricing structure based upon Government projections for future occupancy, and their unshakeable faith in the global popularity of the Expo 2020, mean that many choose to look elsewhere for value and realistic growth.
The cloud of 2008 still hangs ominously over the UAE, and with the bubble slowly being inflated once again, it is felt by industry analysts that the inevitable burst could occur at any time.
The Smart Money
The smart investment money is going into regenerated areas of London, New York, and Sydney, three cities with historically solid and robust markets, and whose construction centrepieces didn’t require a last minute bailout in exchange for an embarrassing name change.
London in particular has seen solid market growth in the outer boroughs of the city. Driven by excellent regeneration schemes, and inflated prices in central, occupancy is on the increase as supply struggles to meet demand. Forecasters expect to see price inflation of 23% between now and 2018.
In the UK’s capital, surveys suggest that in 2013, 30% of property investment in regeneration projects was made by UAE-based investors – the attraction of global diversification, combined with the volatility of the local UAE market proving to be more than just a vague incentive.
In Australia
Australia has also seen significant interest from investors based in the UAE, the excellent value of developments in Melbourne and Sydney in particular capturing the imagination of those looking at a medium to long-term investment.
Melbourne has consistently been ranked as the world’s most liveable city by The Economist each year since 2011. Its metropolitan lifestyle, combined with its impressive education program makes the city particularly popular with international students coming to study. The rental market is huge, with prices increasing by upwards of eight percent annually for the last three years.
Brisbane too represents great value currently. The city is predicted to have a massive shortfall of around 25,000 homes by 2020, so prices are set to continue to rise due to the excessive nature of the demand.
Two other areas that UAE residents are attracted to are, of course New York – where massive projects of regeneration are seeing capital appreciation exceed 60% in under three years – and Niseko in Japan, a growing ski resort-type destination with a glittering reputation. Form an economic perspective, Japan is in recovery after the horrific tsunami of 2011, but the strength of foreign currency remains extremely favourable to investors.
Property is certainly emerging as an asset class set to return to its former glories, after a tumultuous few years. While the UAE may never be of any real appeal from a credible investment perspective, on a global scale, there are many ongoing projects in primary locations which are certainly noteworthy, and are set to perform solidly over the next 10 to 15 years.
