Those interested in Dubai investments will probably want to know where the best place to put their money is. Should you invest into the stock market or is property a better bet? If you go for property, do you invest in residential property, commercial property or the hospitality sector? What about just saving your money in the bank?
Those who possess a relatively small amount of money will most likely have to rule out property from their investment objects list as it’ll cost too much to enter the market. Those who have a larger pot of money, on the contrary, should put such investment at the top of their list. For those wanting to see quicker returns, a decent option may be the stock market, however quicker returns also mean higher risks. It may not be a problem if you are prepared for these risks and possess enough skills and knowledge to avoid possible loss of money. From this point of view, investing in any property looks much safer. Before you go any further you need to think about these two things carefully.
Dubai’s stock market has posted a mixed performance of late. Performance was extremely good between the beginning of 2013 and the middle of 2014, where a near 200pc increase was seen, with the DFM index having reached an all-time high of 5,374.11 in May 2014. Since then the performance has been less good, with the index having slumped to just over 3,500 in December 2014. Stock market investment can be a good option providing you have good advice and keep a close eye on developments within the financial markets. If not playing properly, you may lose all your money even before you see any income. In order to avoid that, you need to learn about how the market works and about various strategies. Whilst many will be drawn to oil and gold, other stock market investments are worth considering. It is also highly advantageous to diversify your investments to mitigate the risk.
Saving your money in the bank provides a safe and hassle-free investment option, however the downside is that investors see little reward. Worldwide interest rates have remained low in recent years, with even Dubai’s highest paying savings accounts only offering interest of around 2 per cent. Deposit accounts are traditionally regarded as a safe and easy way to partially protect your savings from exchange inflation, however one cannot expect the interest to exceed inflation.
Property investment continues to be one of the most popular options for Dubai investments, with the emirate seeing considerable growth in property prices over the last decade. One of the beauties of a property investment is that it offers the chance to generate both immediate and long-term gains. A property can be purchased and let-out to generate regular monthly revenue, whilst also offering the potential for capital gains as property prices increase over the years. For this purpose, it is especially profitable to buy property when the prices are the lowest, right before the next growth cycle so that the investment could generate maximum income in future. Consultants such as Jones Lang LaSalle are a great source of information for those wanting to keep a close eye on what’s happening in the Dubai property market.
Whilst traditional buy-to-let investments continue to be an attractive proposition, hotel investment is an area that has really risen in popularity in recent years. This has been fuelled by Dubai’s increasing popularity as a tourist destination, with visitor arrivals increasing greatly over the last few years. This means that Dubai’s hotels have posted extremely strong performance figures, with high occupancy rates of around 80% and good average per-room rates, which has lead to great returns for investors. There are many hotel investment opportunities in Dubai, such as those offered by The First Group, and they are definitely worth investigating further.
One of the best advantages of such investment is that it doesn’t require the investor’s personal participation in the management process. After purchasing a hotel room, the new owner hands it over to the management company that operates the hotel. Unlike residential property which requires regular checks, communicating and negotiating with tenants, settling the matters with public utilities, etc, a hotel room is fully operated by the management company.
This allows the investor to purchase hotel property in popular tourism destinations such as Dubai while staying at another place and receiving passive income from his or her overseas property. Furthermore, after a while the property can be resold to gain large one-off revenue.