Individual preferences, risk tolerance, and investment goals are the determining factors behind whether one chooses to invest in real estate or the stock market.
Arabian Business interviewed experts in the real estate industry to gain their perspectives on whether it’s still advisable to invest in property in Dubai amidst its remarkable growth in recent years, or if investors might find better opportunities in stocks.
“According to Evgeny Ratskevich, Co-Founder and Partner at Metropolitan Group, the choice between investing in real estate or the stock market hinges on individual preferences, risk tolerance, and investment objectives. While each asset class offers distinct advantages, Ratskevich suggests that a well-rounded portfolio incorporating both could be optimal, as diversification tends to yield superior long-term returns.
“Diversification remains a cornerstone of investment strategy,” remarked Alec James Smith, Director of Sales and Leasing at Savills Middle East. He contends that real estate holds several advantages over alternative asset classes, notably its tangible nature.
“Physical assets often appeal to investors due to their perceived simplicity and ease of assessment relative to stocks,” Smith noted.
Returns from rent and growth
Real estate investments offer the advantage of consistent income streams through tenant rent payments, unlike stocks. Additionally, they provide investors with greater autonomy and adaptability over their assets. Through property ownership, investors retain control over management decisions, renovations, and tenant selection, enabling them to adjust strategies in response to market dynamics, thus influencing returns directly. Moreover, investors have the opportunity to enhance property values through improvements or renovations, resulting in immediate asset appreciation.
Both rental income and long-term property appreciation contribute to returns, which is especially significant given Dubai’s economy and real estate market’s continuous upward trajectory.
Metropolitan Group’s Ratskevich noted that investors have minimal sway over a company’s performance when dealing with stocks. He highlighted the advantage of high liquidity in stocks, allowing swift buying and selling, unlike real estate where capital can remain locked up for extended periods.
According to Akshay Nagdev, Business Head at Foremen Fiefdom, investing in Dubai’s real estate market in 2024 offers an outstanding chance for investors.
Dubai’s property market is experiencing a positive trajectory driven by world-class infrastructure, a thriving tourism sector, and lucrative growth opportunities. According to Nagdev, property prices in Dubai have already witnessed a 1.1 percent increase this year, with projections indicating a further 6.6 percent rise by December.
Rental prices have surged citywide over the past year, prompting many expatriates to opt for property ownership instead of leasing. Additional initiatives such as Golden and Green Visas, along with five-year visas for Indian nationals, have significantly stimulated the property market.
The influx of affluent investors from Britain, Russia, India, and China has bolstered demand in recent years, contributing to the market’s upward trajectory. Experts anticipate that demand will continue to outstrip supply as the population expands, thereby driving property prices even higher.
Population and housing growth
According to the Dubai Statistics Centre (DSC), Dubai witnessed a population increase of over 100,000 individuals last year, coinciding with approximately 40,000 new residential units entering the market.
Savills Middle East’s Smith predicts similar trends for 2024, estimating the handover of 35,000–50,000 units alongside robust population growth, indicating favorable conditions for further expansion.
Investing in Dubai remains appealing due to its potential for high rental yields, relative affordability compared to global counterparts like London, New York, Paris, and Hong Kong, and its increasing attractiveness as a long-term residence.
Nagdev highlights real estate’s status as an appreciating asset, offering steady passive income compared to the volatility of company stocks.
Moreover, real estate serves as a hedge against inflation, as property prices typically rise alongside inflation rates, providing a reliable means of preserving wealth against its erosive effects.
Carl Allsopp, CEO of Allsopp & Allsopp Group, emphasizes that investment preferences are subjective. He personally favors tangible assets like property, emphasizing the enduring necessity of housing. However, he advises diversification and underscores the importance of long-term thinking for both property and stock investments.
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.
Luxury real estate still affordable
Despite an almost 16 percent average price increase in the luxury real estate segment, Dubai remains one of the most affordable cities for such purchases. Nagdev asserts that the city has established itself as an ideal space for investments for both residents and investors, offering a combination of charm and practicality.
Over time, Dubai’s property market has consistently shown growth, potentially resulting in significant capital gains upon sale. Property ownership in Dubai also offers the opportunity for a stable income stream through renting, with certain areas boasting attractive rental yields. Moreover, investing a specific amount in Dubai real estate can qualify investors for a Golden Visa, which provides long-term residency benefits.
Dubai presents opportunities for both residents and investors to gain profits. While both stocks and real estate carry potential upsides, properties in Dubai have emerged as an appealing choice given the current market conditions. The city’s burgeoning population, robust demand, government incentives, and infrastructure development all contribute to a positive outlook. These fundamentals indicate ongoing price appreciation, consistent rental incomes, and a unique ability to hedge against inflation through property.
