Recovery in property market wins over wealthier UAE expats

Wealthy expatriates in the UAE have changed their view of investment in bricks and mortar with most of them now regarding local property as second only to gold as a long-term investment.

Wealthy expatriates in the UAE now regarding bricks and mortar as second only to gold as the best form of long-term investment. Pawan Singh / The National

Wealthy expatriates in the UAE have changed their view of investment in bricks and mortar with most of them now regarding local property as second only to gold as the best form of long-term investment.

According to the pensions provider Friends Provident, affluent expats believe the investment market has improved over the past six months and that it will continue to improve over the next six months.

The poll of 508 global expats in the Emirates with a disposable income of US$4,000 (Dh14,692) a month found that while gold remained the investment they felt most positive about with an index score of 30, property shot up the table, increasing its index score from 20 in June to 28 this month.

The researchers found that 49 per cent of respondents expect the property market to perform strongly over the next five years and a further 11 per cent expect “very strong” growth over the same period.

Just 10 per cent of respondents expected to see some weakness in the property market in the next five years.

Friends Provident conducted the research by asking wealthy expats in the UAE, Hong Kong and Singapore a series of questions about their investment attitudes.

They then converted the responses into an index showing how positively investors felt about different asset types.

“The increased preference for investing in property is not surprising as the UAE continues to recover from the financial downturn.

“This is a sign of confidence returning to the local market,” said Matthew Waterfield, Friends Provident’s general manager for the Middle East and Africa region.

The researchers added that the index had been amended over the past six months to include only responses from wealthy expats rather than a representative sample of the population.

UAE respondents were the least positive in terms of their outlook for the overall market, with an index score of 17, while expats based in Hong Kong were the most optimistic with an index score of 38.

Equities were the least popular asset type among UAE investors with an index score of just seven.

According to the report, 25 per cent of those surveyed said that they thought now was a “bad” or a “very bad” time to invest in stocks and shares.

Cash was the third most popular investment type for expats according to the survey, with an index score of 20, followed by bonds at 13.

The vast majority of respondents in the UAE (93 per cent) said that they were saving up to pay for their children’s education, while only 49 per cent said they were saving for retirement. Seven per cent of those questioned said they were not saving at all.