More people in the UAE prefer to invest their spare cash in property rather than leave it in the bank, according to new research by wealth manager Quilter.
Around 37 per cent of UAE residents said they will invest extra cash in property compared with 35 per cent who would put the money in a savings account, the survey found. It polled 1,000 people in the UAE in November last year.
The Covid-19 pandemic has highlighted the importance of having an emergency fund for short-term liquidity needs, but a combination of record-low interest rates and inflation will eat away the value of savings, Brendan Dolan, global distribution director of Quilter International, said.
“For a long time, investing in property has been seen as a safe bet, so it is no surprise that lots of people would choose to invest in this market," Mr Dolan said.
"It is always sensible to build up an emergency cash fund to help get through tricky times such as this pandemic. However, the important thing to remember is that sitting on too much cash is not always the safe bet. Inflation eats away at the value of your money and low interest rates means you may not be getting that much from your account."
The Quilter research resonates with the findings of another survey by Bayt.com and YouGov in November, which found that 43 per cent of people in the UAE consider it a priority to buy property in 2021.
Only 19 per cent of those polled in the Quilter survey said they would invest extra money in stocks and shares, while a similar number of respondents said they would park their extra cash in other markets-based investments such as funds and bonds.
“If you are only investing in real estate and cash, you are heavily reliant on those two asset classes being the answer to all of your investment needs,” Mark Leale, head of Quilter Cheviot’s Dubai branch office, said.
“The real estate will hopefully provide a positive income net of costs and taxes, plus also increase in value, but it is an illiquid asset. Conversely, cash is highly liquid, but will almost certainly decline in value when taking into account the effect of inflation.”
Only 5 per cent of those polled expressed interest in investing spare money in art, antiques or cars, according to Quilter research.
Meanwhile, 10 per cent of those surveyed said they will see a financial adviser and 14 per cent will use the money for a holiday.