The main benefits of investing in the UAE are a strong legal framework for investment protection and the best investment options. Each year, the UAE attracts numerous foreign direct investments (FDI), and according to the UN Conference on Trade and Development Report, by 2021; the UAE was ranked 1st among Arab countries and 15 in the world because of its ability to attract FDI. As the UAE country provides a wide range of assets to investors from around the world, we have prepared a detailed article on 6 of the most popular Dubai Investment Real Estate options in the UAE.
The UAE offers investors several investment options in areas such as stocks, bonds, joint ventures, ETFs, REITs, and real estate investments, which will be explained below.
The shares are part of the money of any company; any investor can own it until they decide to sell it. In this case, when investing in stocks, you can rely on 2 ways to make a profit: dividends, which are paid every 3 months in most cases, or gratefully. The second option is best suited for long-term investments as, for example, investors who bought shares of International Holding Company PJSC (IHC) at AED 1,400 (USD 380) in 2016 were able to sell up to AED 152,200 (USD 41,400) by 2021. But it is worth remembering that stocks can not only go up in value but can also fall, leading to huge losses.
Note: To invest in the UAE stock market, you need to open a trading account with a broker. The selected broker should be listed on one of the following shares within the region: Abu Dhabi Securities Exchange (ADX), Dubai Financial Market (DFM), and NASDAQ Dubai.
A bond, unlike the above-mentioned shares, which can be sold or repurchased at any time, is a fixed-term loan given to a company or government to change interest rates (e.g. 10 or 20 years). On the maturity day, all bonds pay off for the principal, but some bonds pay interest to the owners and the principal. Bonds with an annual interest rate are paid to investors between the time the bond is issued and the date of its maturity. One of the great benefits of investing in bonds is that you can evaluate your profits early.
Before maturity, an investor can sell bonds at a higher price, thus making a profit. If the bonds have not been sold before, they will be used by their deadline. The issuer then pays the owners the amount indicated on the securities.
The biggest risk to this type of investment is the collapse of the issuing company. Secure bonds are not a safe form of investment in these cases because the security of the investment can be guaranteed by deposit (company property or other securities). If the company goes bankrupt, the investor will be able to sell the deposit, which will allow them to get their money back. Another collateral option is a guarantee from another company, which can also take on bond bonds in the event of a collateral collapse.
The most suitable investment options are:
- Company bonds are issued by the company to raise funds.
- National – news from a coalition government.
- Municipality – guarantees issued by government agencies to finance day-to-day obligations and to finance major projects such as schools and highways, etc.
As for how to make a profit by buying bonds there are 2 ways: by paying interest twice a year at a fixed price, or by increasing the price. When interest rates fall and new bonds are issued at lower interest rates, the number of bonds issued at higher interest rates only increases.
A mutual fund is a large sum of money from a few investors with the same investment goal. This amount of money is invested in bonds, shares, gold, houses, and other assets by financial managers or stocks. This type of investment is suitable for those who do not have enough time to learn investment opportunities. It is noteworthy that in this case, the investors are not the direct owners of the shares purchased by the trust, but have a share in the gains and losses of the mutual fund. There are many investment options.
Emirates NBD, ADCB, CBD, HSBC, and other banks offer similar funds in the UAE. They offer a formal investment plan (SIP) where an investor can invest from AED 734 (USD 200) in the SIP every month for a short period. A mutual fund’s unit price is determined by the number of bonds, shares, and securities in which it is invested.
In this case, you can make a profit in the following ways:
- Shares/interest, where the owners of joint ventures buy shares or bonds and distribute the dividends or interest received from shareholders.
- By growing the mutual fund’s worth based on the amount of securities acquired and the organization’s market demand.
There are open and closed investments in the stock market. The difference between them is that open funds are available for sale throughout the holding period, while closed funds are only available on specific maturity dates. Investors can also meet the costs of operating and operating efficiently. Non-performing funds include reference funds and operating expenses include liabilities, special funds, and balances. Inactive funds propagate market performance and active capital proceeds to override these operations. However, operating funds are not always transparent to owners but promise high returns, but also have high risks and costs.
Because investors may not be able to own several types of assets in ETFs as part of a specific investing choice, equity funds are great for inactive investors and the best investment options.
You can invest in equity funds in two ways: alone with clients or with a financial advisor. In the first situation, you’ll need to create a brokerage account with a firm that’s listed on the relevant stock market. If you work with a financial advisor, they will help you establish an ETF portfolio and monitor it over time.
For greater variety, you can combine different ETFs. For example, an investor can invest in international stock ETFs; US stock ETFs, and global REIT ETFs, all of which will boost returns and lower risks.
Real estate investments or REITs allow investors to benefit from the UAE real estate market without having to buy property right away. Like any other company, investors can buy and sell shares in REITs, earning dividends on various shares and increasing the number of investment trusts.
Emirates REIT distinguishes out among the UAE’s major investment real estate trusts since it follows Shariah and is registered with the DIFC. The assets under their control are estimated to be worth USD 723 million. Emirates REIT’s shares are listed on Nasdaq Dubai.
REITs provide investors with the ability to diversify their portfolios and provide flexibility and flexibility. When an investor buys REIT, he thus acquires various properties with different revenue streams. Additionally, corporate trading stocks are simpler and faster than selling tangible real estate, and owning a building requires rental care and collection while owning REIT shares gives investors a legitimate profit margin.
Due to its stability, flexibility, and accessibility, the UAE housing market has evolved into an overseas investment destination over the years. The biggest benefit of investing in real estate in Abu Dhabi is that it will not be affected by inflation and can generate an annual income of between 7% and 12%. According to a CBRE analysis, property prices in Abu Dhabi grew 2.2 percent between January and August 2021. The retail price per 1 sq. km. ft. in certain core emirate districts is AED 1,086 (USD 295), according to the Numbeo website, whereas in London, GB, it is USD 1,562. Outside the city center, it drops to USD 751.
Several tips are available when considering buying a property such as an investment in Abu Dhabi:
- Buying random properties – you buy directly from the developer, under simple payment systems that are periodically separated. The financial burden is lower than when you buy a decent home, as it is a cost in itself. In addition, the price of buildings only increases as the construction stages are completed. Once the construction is complete, the investor can resell the property or start leasing it and start earning a steady income.
- Buying a built-in property allows you to start renting a unit quickly and earn an income. But it is worth remembering that the price is high compared to unplanned properties, but you can apply for a loan and use the rent to cover some of the costs.
In addition to accommodation, investment in commercial real estate such as hotels, office buildings, and warehouses is also much needed? Here the lease is completed over some time (anywhere from 3-5 years or more) and the return on investment is very high – up to 15%.
It is important to remember that investing in a property for sale in Abu Dhabi, as well as in the UAE in general, can be a complex process, especially if you do not know the location and do not have time to research the Emirate’s local market.