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Can you make money in UAE real estate today?
Posted on 03/03/09
It's no secret the Dubai economy is experiencing set backs, and to a lesser extent the national economy. The real estate market in Dubai has experienced significant development cancellations, Dubai has refinanced $10 billion in Emirate debt from pending development objectives, unemployment has risen, and short-term investors are experiencing unappealing investment performance.
But let's not fool ourselves, the word "investment" does not mean instant money, at least that's not how Benjamin Graham and Warren Buffet seem to have understood the word. Quick money comes easy and goes easy unless one is either 1) really lucky, 2) very well informed on current events and 3) an outstanding trader. Those three conditions are a tall order even in the investment world.
So how can you make money investing in UAE real estate right now? The answer is you'd be lucky if you did, but you are more likely to make money investing in UAE real estate over the long term. No recession in the modern history of developed economies has lasted forever which is telling of what is to come if investors shed the doom and gloom of the global recession for realistic economic forecasts.
The facts are, Dubai is a tax haven, it still has some oil, favorable location, a shipping hub, a commerce friendly government, and a wealthy neighboring emirate called Abu Dhabi. The emirate of Dubai may be experiencing an economic bump in the road, but how many economies don't? Seeing the investment forest for the trees means accurately predicting growth, development and demand trends. If an investor can successfully do that, that investor should have a better chance of making money on real estate.
To illustrate a little more, think of Dubai 5 and 10 years from now. Will it be a barren desert then? Will real estate develop once again? Will its status as a regional financial center blossom? If oil rises again, will this enhance the U.A.E's economic development, and how well will existing sovereign wealth funds be managed to ensure a bountiful return in the future? Assuming shrewd State and commercial fiscal management and monetary policy within the U.A.E., making money in the UAE could once again be a reality.
The nationalization of Dubai mortgage lenders, and financial surplus of the UAE national government position the UAE economy in a way that can weather the ripples of the global financial crisis. Government sponsored developments and land development regulation promote developer responsibility and support the real estate market in a more financially conservative way than the U.S. has seen in recent times.
Posted by A.W.Berry
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About me: I am an American with a diverse heritage and have lived in several countries. My work experience and background centers around corporate, marketing and financial areas and my educational background includes a M.B.A. in Finance and Marketing in addition to a M.A. in Philosophy.
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