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The decision to invest in real estate or stock market is driven by individual preferences, risk tolerance, and investment goals
Dubai’s real estate market has seen tremendous growth over the past few years, leaving many investors wondering if now is still a good time to buy property in the emirate or if their investments are better served in company stocks.
Arabian Business spoke to real estate industry insiders to get their insighs on the market’s outlook and how it stacks up against other assets.
“The decision to invest in real estate or stock market is driven by individual preferences, risk tolerance, and investment goals,” said Evgeny Ratskevich, Co-Founder and Partner at Metropolitan Group. Both asset classes provide unique benefits, he said, but a well-balanced portfolio including a combination of both would be ideal because diversification can lead to better long-term gains.
“Diversification is always encouraged in investing,” said Alec James Smith, Director of Sales and Leasing at Savills Middle East. He believes that real estate can provide several benefits over other asset classes, including the fact that it is tangible.
“Many people prefer investing in physical assets, as they find them easier to understand and evaluate compared to stocks,” Smith added.
Unlike stocks, real estate investments allow for regular income generation through collecting rents from tenants. But it also comes with a host of other benefits like more control and flexibility over assets. With properties, investors can control management decisions, renovations, tenant selection, and adapt strategies based on market conditions – all of which can have a direct impact on returns. Investors can even make improvements or renovations to their properties, which can immediately impact the asset’s value.
Returns can come from both rental income and long-term property appreciation. This is particularly important in the current climate where Dubai’s economy and real estate market continue on their upward trajectory.
“[With stocks,] investors have limited influence over a company’s performance,” said Metropolitan Group’s Ratskevich. “For those looking for high liquidity, stocks are a good option as it allows investors to buy and sell quickly, unlike real estate where cash can be tied up for years.”
“Investing in Dubai’s real estate market in 2024 presents an exceptional opportunity,” said Akshay Nagdev, Business Head at Foremen Fiefdom.
World-class infrastructure, a booming tourism industry, new growth opportunities, favourable visa and policy reforms, as well as investment initiatives have pushed market projects to continue on a positive trend. Property prices in Dubai are already seeing a 1.1 percent increase this year and are expected to rise 6.6 percent by December, according to Nagdev.
Over the past year, rent prices have skyrocketed across the city, leading many expats to buy instead of leasing. Other initiatives like Golden and Green Visas as well as five-year visas for Indians have given the property market a major boost.
Wealthy British, Russian, Indian and Chinese investors have cashed in on the trend, further fuelling demand over the past few years and experts project that demand will only continue to outpace supply as the population grows. This is likely to push property prices up even further.
According to the Dubai Statistics Centre (DSC), the emirate’s population grew more than 100,000 last year. At the time, around 40,000 new residential units went onto the market.
“Early estimates for population growth and new homes handed over in Dubai for 2024 are at similar levels, with roughly 35,000–50,000 units expected to handover and population growth going strong, with the market primed for further growth,” said Savills Middle East’s Smith.
“It is still a good time to invest in Dubai, a city that can offer buyers high rental yields, is still relatively cheap compared to other well-known cities around the world, i.e., London, New York, Paris, and Hong Kong, and is becoming a [long-term] home for increasingly more people year after year.”
According to Nagdev, investing in real estate is an appreciating asset, making it seem more advantageous than investing in company stocks due to their potential for steady passive income.
But perhaps more importantly, real estate can serve as a hedge against inflation because prices typically rise in tandem with inflation rates. This makes it a reliable investment choice for those looking to protect their wealth against the effects of inflation.
Carl Allsopp, CEO of Allsopp & Allsopp Group believes these investment decisions ultimately boil down to personal preference.
“I like to invest in things I can see and things that people will always need – a home. It would be prudent to always diversify with your investments, regardless, for both investing in property and shares, the key is: think long-term,” he said.
As Dubai’s population continues to grow, the government has an excellent track record of executing ambitious plans to attract more investments and improve the alreayd brilliant quality of life in the city, he said. “Buy Dubai, but think long-term.”
“Not every property or development is equal, you must assess building quality, service fees, of course, the location and even the views as they can all determine what a good property investmemt should be.”
Dubai stands out as one of the “few global cities to sustain demand growth despite the global geopolitical uncertainty making it an attractive option to relocate and invest in,” said Ratskevich.
With the city recently being ranked as the 9th most liveable city for expats in the Global Expat Index and there being an anticipated population surge, demand for quality housing remains high. This opens up an opportunity for those looking to cash in on their investments.
Dubai remains one of the most affordable cities for luxury real estate purchases, despite a nearly 16 percent average price increase in the market segment. And according to Nagdev, the city has “positioned itself as the perfect space for investments for both residents and investors. The city offers a blend of allure and practicality.”
“Historically, the city’s property market has demonstrated consistent growth, potentially leading to substantial capital gains upon sale. Owning property in Dubai can also provide a steady income stream through renting, with some areas offering attractive rental yields. Additionally, investing a specific amount in Dubai real estate can qualify investors for a Golden Visa, granting long-term residency benefits.”
Dubai has room for both residents and investors to profit. While both stocks and real estate offer potential upsides, properties in the emirate have emerged as an attractive option given current market conditions. Dubai’s surging population, strong demand, government incentives, and infrastructure growth underpin a positive outlook. These fundamentals suggest continued price appreciation, steady rental incomes, and inflation-hedging ability unique to property.
Source: Arabian Business
