Understandably, investors in the UAE want to get the most value for their money. When considering making an investment, we often get asked, is it better to invest in property or shares?
It is important to remember there is no right or wrong answer. The question you should ask yourself is, “What am I looking to achieve in the medium to long term and what path should I take to minimise my risk vs reward.”
As with all investments, timing will be one of the leading contributing factors to the success of your investment. We explore why property remains the leading asset class for investors worldwide.
The UK Property Market is Strong & Historically Easier to Predict
The UK has one of the most stable property markets in the world. Historically speaking, house prices in the country double between every 10-15 years, which can make property an excellent source for capital growth.
Investors based in the UAE can also capitalise on the weak pound rate in the UK to get more value from their dirhams. When the pound rate drops, other currencies — such as the UAE’s — tend to increase. In turn, the amount of capital growth a Dubai-based investor could see from UK property, may be even greater than first thought once the currency exchange rate has been calculated.
Experts predict that house price growth in the UK will increase on average by 15% by the year 2024. If you want to know where the best places to invest in property are in the UK, areas such as Manchester, the Midlands and Wales are on track to far surpass the national average growth rate. As a prime example of this, capital growth in Manchester is predicted to reach as high as 24%. Check out our article, Why Invest in UK Property, for more details.
While there are no guarantees with any investment, it’s much easier to predict how the property market will look over a 10 year period than it is to predict the stock market. For example, no one could have guessed that shares in toilet paper, hand sanitiser or PPE would increase by significant margins if they were looking for an investment back in 2019.
Shares can be volatile, and there are many factors that can influence your returns. Politics, the economy and even a global pandemic could mean you make a great return or potentially lose your full investment. When looking at long term financial security, property has continued to be a firm investment option.
One of the main reasons why investors choose property over shares is that you don’t have to use all your cash reserves to get started. Property investors in Dubai and across the world can use leveraging in the form of a mortgage to build a strong and stable portfolio, enhancing returns on investment.
By using a mortgage to invest, you greatly reduce the amount of money you need upfront to make a purchase, investing as little as 25% of the purchase price.
Historically, over a medium to long term period, the value of your property can increase, which can lead to excellent returns on investment when you decide to sell. And while the capital growth steadily rises, you will be generating consistent returns through rental income.
Property Gives You Greater Control
When asked is it better to invest in property or shares, we remind our clients that you are in full control of your property. When you purchase a property, you can manage it in the way you want to, as long as you keep up with your mortgage payments and adhere to the local council guidelines.
This means you have more opportunities to increase the value of your investment. You may decide to refurbish your property and make changes to floor plans, bringing the property additional value to potential new tenants and buyers. You are in full control.
With shares, you will have limited if any control of how a business is run, unless you are the majority shareholder. This means if you don’t agree with the way a company conducts business, you will not be able to make any changes.
Property is a Physical Asset
As a physical asset, property will always have a value, regardless of any market changes. Unlike shares, this level of security is not there. Businesses can fail and shareholders can lose all the capital they have invested. Shares are a more speculative investment option, so you have to have full confidence & knowledge before making a purchase, and you will need an extremely good exit plan in place to ensure you don’t take too much of a loss.
Is it Better to Invest in Property or Shares for Dubai Investors?
When investing in shares and property, there are pros and cons. Historically though, the UK property market has proven to be a stable investment option for many. History shows the property market has doubled every 10 to 15 years, making it one of the better long-term investment choices.
At Treo Investments, we provide our clients with a full 360 bespoke service. This means we will take the time to understand what goals you want to achieve as an investor, we’ll find you the right property, cover every step of the purchase process, through to renting and managing the property.
To learn more about the benefits of investing in property over shares, or for information on any of our latest opportunities, get in contact with the Treo Investments team today.