Property has taken over from gold as the most popular investment for United Arab Emirates (UAE) investors.
In an unexpected switch, 53% of UAE investors confirmed they owned property in their portfolios compared to 43% holding gold.
But the investors distrust the local property market, which has had problems with lack of regulation and developers collapsing projects.
Instead, they are more confident about owning property overseas – with London (21%), New York (13%), Sydney (13%), Melbourne (8%) and Manchester (8%) topping the list of preferred destinations.
Only 12% – or one in eight – own property in the UAE.
Confidence builds in overseas property
However, new legislation and tougher regulation introduced by the government is raising confidence levels in the home market among property investors.
Around 57% say they will buy their next property in the UAE, including a third of European and US expat investors.
The figures come from IP Global, an international property consultancy.
The study revealed that although property and gold were the most popular investments for UAE residents, including locals and expats, 30% also held commodities, bonds and equities.
Paul Preston, Director and Head of IP Global in the Middle East said: “Gold is often cited as a safe haven asset that retains value in volatile currency markets. The fact that UAE investors are switching from gold to property looks as if they are confident that currency markets are stable, giving them a chance to diversify their portfolios.”
Prime performance lures investors
The property market in the UAE, especially in Dubai, has seen some notable lows and highs in recent years as prices plummeted after the credit crisis and are only just recovering to near their peak.
Many investors lost speculative cash paid on off-plan properties as offshore developers took their money and fled overseas.
The government has established new laws to regulate brokers and developers to safeguard investors that have restored some confidence in the market.
“Property has switched from a poor performer to a prime performer in many investment portfolios,” said Preston.
“Investors are savvy. Taking London as an example, they are not only buying prime Central London homes, but better yielding properties in lesser known outer neighbourhoods.
“We’re also seeing increasing attention being paid to other overseas markets in the US and Australia. Brisbane in Australia together with Chicago and Miami in the States are also proving popular.”
