"Location, location, location" or, in other words, buying the right property at the right time in the right place, is the general rule when investing in global real estate.
But another approach uses the "catch-up theory" as a guide as to what to buy, and for a long-term investment such as property it has many attractions.
What this theory says is that you should buy real estate in countries, cities or districts - or preferably all three - that have the most room to catch-up in price with major markets, and the wherewithal to make it happen; the bigger the gap to be traveled the bigger will be the eventual capital gain.
I first came across this idea in the early days of the Dubai real estate market for foreign ownership. To my thinking the gap in price between Dubai homes and comparable markets overseas was just ludicrously large.
Of course there were reasons for this: foreign ownership was only just established so it was a new market with no precedent to follow on prices; the actual law to permit foreigners to own was not in place; and the mortgage market was in its infancy with just one provider.
My enthusiasm was controversial at the time. One reader wanted to "rip out my throat" for giving this advice. He later became a friend and now regrets missing a lifetime opportunity.
And yet back then Dubai was already a wealthy city, if not as rich as it is today. People paid high rents so large mortgages were going to be affordable.
The same argument applied in Abu Dhabi a few years later when it opened up to foreign ownership, albeit leasehold and not freehold. And, in due course, prices doubled and trebled and came more into line with global levels for similar properties in cities of similar income levels.
But I would suggest that the "catch-up theory" can still be applied in the UAE in the right districts. Estate agents Knight Frank are tipping Palm Jumeirah for 2018 as one of five global super-prime markets likely to see the largest future price increases.
Why? Well, super-prime property prices here are still a fraction of levels seen in London and New York.
Plus, in the case of the Palm, there are billions of dollars being spent in upgrading its infrastructure: the new Nakheel Mall in its centre, the new 1.5km The Pointe boardwalk restaurant and retail destination, several additional five-star deluxe hotels, new towers and more super-prime shoreline apartments.
Will The Palm Jumeirah become Dubai’s answer to Nice’s Promenade des Anglais? If it does then property price increases in this district should easily exceed the Dubai average.
What I like about the catch-up theory is that it avoids the most highly-priced markets. These could well be at multi-decade highs, like Tokyo in 1990, and be set for a major fall, or simply doomed to stagnate.
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However, I would not be too gloomy about investment-grade property for wealthy investors around the globe. There is an established, multi-decade, global trend towards a larger and richer wealthy class, and that bodes particularly well for real estate at the upper end of the market.
That said you can’t really look in the window of an estate agents in London or New York without feeling that prices have to be at something of a peak, like assets classes such as stocks and bonds; and naturally there is a link between the three.
But while the UAE may still have a good deal of catching up to do before its house prices approach those of comparably wealthy cities around the world, there are markets that probably have an even bigger journey to make to catch up with their near neighbours.
One way to approach this is to consider average income in a country now and what it is expected to be in say 30 years’ time. House prices, very conveniently, tend to rise at double the rate of salary inflation, so get this right and you will be very happy.
In 2012 HSBC published a long-range study that forecast likely average incomes around the world by 2050. This can hardly be considered a definitive, or in anyway a fool-proof study, but it is probably the best available.
The report highlighted the considerable catch-up potential of economies in eastern and central Europe and parts of Asia.
By contrast average income in the UK, Germany and the US improved relatively little, to around $50,000 per head in year-2000 dollars.
The leap in Hungary was from only $6,200 last year to $32,000 by 2050, and in the Czech Republic from $7,200 to the same amount. So, theoretically, if you bought a property in Hungary then in 33 years’ time it would be worth 10-times what you paid for it today.
You might think that an absurd proposition. And yet the price advances in the former communist bloc have already been stellar. In St Petersburg, Russia in the 2000s apartment prices rose 10-fold in a decade, by no means an isolated example.
Now, it is true from a practical point of view that not every market in the world is investible. But new markets are being added from time-to-time, such as the UAE in the 2000s and eastern Europe in the 1990s, and these may still offer big catch-up potential.
Asia can also be interesting, although it does tend to be more of a local than global market. In Thailand, for instance, you cannot buy as a foreigner except in special zones like the Laguna Phuket that I looked around in January.
Then again Asian holiday resort properties could be an excellent buy long-term if their valuations play catch up with comparable tourism hot spots in the rest of the world, and the growth of Chinese and Indian tourist volumes is prodigious.
My reckoning on global property is that the ultra-low interest rates of the past decade have to a certain extent maxed out house prices in many leading markets. Be patient and prices could come down, representing a much better entry point.
But for the best investments those property markets with the most catch-up potential should offer much better returns.
Peter Cooper has been writing about Gulf finance for two decades.
Election pledges on migration
CDU: "Now is the time to control the German borders and enforce strict border rejections"
SPD: "Border closures and blanket rejections at internal borders contradict the spirit of a common area of freedom"
Skewed figures
In the village of Mevagissey in southwest England the housing stock has doubled in the last century while the number of residents is half the historic high. The village's Neighbourhood Development Plan states that 26% of homes are holiday retreats. Prices are high, averaging around £300,000, £50,000 more than the Cornish average of £250,000. The local average wage is £15,458.
Specs
Engine: Electric motor generating 54.2kWh (Cooper SE and Aceman SE), 64.6kW (Countryman All4 SE)
Power: 218hp (Cooper and Aceman), 313hp (Countryman)
Torque: 330Nm (Cooper and Aceman), 494Nm (Countryman)
On sale: Now
Price: From Dh158,000 (Cooper), Dh168,000 (Aceman), Dh132,000 (Countryman)
The specs
Engine: Four electric motors, one at each wheel
Power: 579hp
Torque: 859Nm
Transmission: Single-speed automatic
Price: From Dh825,900
On sale: Now
If you go
The flights Etihad (www.etihad.com) and Spice Jet (www.spicejet.com) fly direct from Abu Dhabi and Dubai to Pune respectively from Dh1,000 return including taxes. Pune airport is 90 minutes away by road.
The hotels A stay at Atmantan Wellness Resort (www.atmantan.com) costs from Rs24,000 (Dh1,235) per night, including taxes, consultations, meals and a treatment package.
World ranking (at month’s end)
Jan - 257
Feb - 198
Mar - 159
Apr - 161
May - 159
Jun – 162
Currently: 88
Year-end rank since turning pro
2016 - 279
2015 - 185
2014 - 143
2013 - 63
2012 - 384
2011 - 883
Martin Sabbagh profile
Job: CEO JCDecaux Middle East
In the role: Since January 2015
Lives: In the UAE
Background: M&A, investment banking
Studied: Corporate finance
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Types of bank fraud
1) Phishing
Fraudsters send an unsolicited email that appears to be from a financial institution or online retailer. The hoax email requests that you provide sensitive information, often by clicking on to a link leading to a fake website.
2) Smishing
The SMS equivalent of phishing. Fraudsters falsify the telephone number through “text spoofing,” so that it appears to be a genuine text from the bank.
3) Vishing
The telephone equivalent of phishing and smishing. Fraudsters may pose as bank staff, police or government officials. They may persuade the consumer to transfer money or divulge personal information.
4) SIM swap
Fraudsters duplicate the SIM of your mobile number without your knowledge or authorisation, allowing them to conduct financial transactions with your bank.
5) Identity theft
Someone illegally obtains your confidential information, through various ways, such as theft of your wallet, bank and utility bill statements, computer intrusion and social networks.
6) Prize scams
Fraudsters claiming to be authorised representatives from well-known organisations (such as Etisalat, du, Dubai Shopping Festival, Expo2020, Lulu Hypermarket etc) contact victims to tell them they have won a cash prize and request them to share confidential banking details to transfer the prize money.
The specs
Engine: 1.5-litre turbo
Power: 181hp
Torque: 230Nm
Transmission: 6-speed automatic
Starting price: Dh79,000
On sale: Now
Results
5pm: UAE Martyrs Cup (TB) Conditions Dh90,000 2,200m
Winner: Mudaarab, Jim Crowley (jockey), Erwan Charpy (trainer).
5.30pm: Wathba Stallions Cup (PA) Handicap Dh70,000 1,400m
Winner: Jawal Al Reef, Richard Mullen, Hassan Al Hammadi.
6pm: UAE Matyrs Trophy (PA) Maiden Dh80,000 1,600m
Winner: Salima Al Reef, Jesus Rosales, Abdallah Al Hammadi.
6.30pm: Sheikha Fatima bint Mubarak (IFAHR) Apprentice Championship (PA) Prestige Dh100,000 1,600m
Winner: Bainoona, Ricardo Iacopini, Eric Lemartinel.
7pm: Sheikha Fatima bint Mubarak (IFAHR) Ladies World Championship (PA) Prestige Dh125,000 1,600m
Winner: Assyad, Victoria Larsen, Eric Lemartinel.
8pm: Sheikh Zayed bin Sultan Al Nahyan Jewel Crown (PA) Group 1 Dh5,000,000 1,600m
Winner: Mashhur Al Khalediah, Jean-Bernard Eyquem, Phillip Collington.
How to wear a kandura
Dos
- Wear the right fabric for the right season and occasion
- Always ask for the dress code if you don’t know
- Wear a white kandura, white ghutra / shemagh (headwear) and black shoes for work
- Wear 100 per cent cotton under the kandura as most fabrics are polyester
Don’ts
- Wear hamdania for work, always wear a ghutra and agal
- Buy a kandura only based on how it feels; ask questions about the fabric and understand what you are buying
The specs
Engine: Dual 180kW and 300kW front and rear motors
Power: 480kW
Torque: 850Nm
Transmission: Single-speed automatic
Price: From Dh359,900 ($98,000)
On sale: Now
Other workplace saving schemes
- The UAE government announced a retirement savings plan for private and free zone sector employees in 2023.
- Dubai’s savings retirement scheme for foreign employees working in the emirate’s government and public sector came into effect in 2022.
- National Bonds unveiled a Golden Pension Scheme in 2022 to help private-sector foreign employees with their financial planning.
- In April 2021, Hayah Insurance unveiled a workplace savings plan to help UAE employees save for their retirement.
- Lunate, an Abu Dhabi-based investment manager, has launched a fund that will allow UAE private companies to offer employees investment returns on end-of-service benefits.
Mia Man’s tips for fermentation
- Start with a simple recipe such as yogurt or sauerkraut
- Keep your hands and kitchen tools clean. Sanitize knives, cutting boards, tongs and storage jars with boiling water before you start.
- Mold is bad: the colour pink is a sign of mold. If yogurt turns pink as it ferments, you need to discard it and start again. For kraut, if you remove the top leaves and see any sign of mold, you should discard the batch.
- Always use clean, closed, airtight lids and containers such as mason jars when fermenting yogurt and kraut. Keep the lid closed to prevent insects and contaminants from getting in.
SPECS
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Isle of Dogs
Director: Wes Anderson
Starring: Bryan Cranston, Liev Schreiber, Ed Norton, Greta Gerwig, Bill Murray, Jeff Goldblum, Scarlett Johansson
Three stars
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What is the Supreme Petroleum Council?
The Abu Dhabi Supreme Petroleum Council was established in 1988 and is the highest governing body in Abu Dhabi’s oil and gas industry. The council formulates, oversees and executes the emirate’s petroleum-related policies. It also approves the allocation of capital spending across state-owned Adnoc’s upstream, downstream and midstream operations and functions as the company’s board of directors. The SPC’s mandate is also required for auctioning oil and gas concessions in Abu Dhabi and for awarding blocks to international oil companies. The council is chaired by Sheikh Khalifa, the President and Ruler of Abu Dhabi while Sheikh Mohamed bin Zayed, Abu Dhabi’s Crown Prince and Deputy Supreme Commander of the Armed Forces, is the vice chairman.
UAE currency: the story behind the money in your pockets
UAE currency: the story behind the money in your pockets
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