Risk assessment of real estate investments using the UAE as an example

The UAE is one of the most popular destinations among foreign investors. The country is considered to be the best place to compare risks with possible profits. This is well-known by private experts and companies, including independent researchers and analysts specializing in risk assessment. The security status of investments is based on many different criteria — you can read more about this issue in this article.

UAE's position among investors

The United Arab Emirates is one of the main countries in the Middle East that both private and legal entities have been investing in many years. Countries with an investment flow are not limited to neighboring states. The following countries are also perfect for investment, namely, the United States, Canada, and Western Europe.

Businessmen emphasize the following reasons for their loyalty to the UAE:

• Political stability;
• Currency stability;
• High standard of living;
• Advanced technology development;
• Developed logistics;
• No restrictions for foreign investors.

Low risk of real estate investments in the UAE

The UAE is a model for strengthening the position of a country with cities that rank first in the world in terms of quality of life and investment security. Information on the investment attractiveness of the United Arab Emirates comes from various expert sources. It is worth paying attention to the information provided by the international company A.T. Kearney Middle East. The organization reports that the UAE is the most important center of foreign investment in the Middle East. This success is due to the developed logistics and rapid growth of the tourism sector. Other positive factors included the UAE's tolerance for all nationalities and religions. Experts A.T. Kearney Middle East predict that investment in this country will multiply in the coming years due to regularly changing legislation. For example, relatively recently, the UAE expanded the list of gold visa investors to include highly qualified medical and technology professionals.

Such analytical data correlates with the fact that the state and its subjects often rank first in terms of the quality of life of its inhabitants. Thus, Dubai was named the best place to live among Middle Eastern countries by the results of the latest survey of the consulting company Mercer for 2021. The survey was called "Quality of Life". Dubai also ranked 5th in the World Best Cities Rankings for 2021 as reported by Resonance Consultancy in the World’s Best Cities Report.

According to the Minister of Economy of the UAE, Sultan bin Saeed Al Mansoori, the total volume of investments exceeds USD 100,000,000,000 annually. Here, private investment is also worth noting. This is true for real estate, especially since foreigners have been allowed to own property in the country since 2002.

The foreign investment laws in the UAE are regularly reviewed and improved for investors:

• The bureaucratic process is changing; more convenience is being introduced, for example, digitalization of the document submission process.
• Modern trends are taken into account — thus, the UAE now approves cryptocurrency when purchasing real estate, and the various stages of starting a business and making investments are also carried out remotely.

The government is doing everything possible to keep the market competitive and attractive for investors.

Economic factors for favorable investment in the UAE

The Minister of Economy, Sultan bin Saeed Al Mansoori, reported that the country's economic structure has continued to thrive in 2021 despite the precarious situation around the world. The oil structure is profitable in the country but it’s still a dangerous factor for any country. So although the UAE began as an oil-producing country, the focus for this has since shifted. Nowadays, the economy’s dependence on oil is only one third. The rest of the financial influx comes from other fields such as:

• IT technologies;
• Private business;
• Medicine;
• Real estate and investments.

GDP is another aspect that is important when looking at potential countries for investment. And it is important to look at this issue not only in the moment but also as it develops. The GDP in the United Arab Emirates for 2020 is more than USD 354,000,000,000. The reason for the previous drop (from USD 421,000,000,000) was due to the pandemic. However, in past years, the GDP either remained at the same high level or grew from year to year. Even when the global economy was going through tough times, for example, in 2018, the GDP in the UAE succeeded in increasing by 9.49%.

The growth trend is expected to continue in 2022. Thus, the rating agency S&P Global reports that in 2021, dynamics will increase by more than 30% - experts inform that the gradual recovery from the pandemic and favorable market trends in the development sector are the main reasons for the increase in demand.