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Unstable Market Conditions Represent the Best Investment Period for Reduced Prices, High Investment Values and Returns  Affordable Real Estate Products for Youth Will Help Activate Demand

 

High-net-worth individuals have led the shift in the real estate sector due to the strong demand in any community. It is the influence of HNWI that has made a change in the laws and legislations relevant to freehold or foreigners’ ownership at several international real estate markets. However, it would be an exaggeration to say that HNWI are those who led the investment and finance movement for the real estate sector in the region’s markets over the past years or contributed to accelerating construction pace, introducing major amendments to the supply and demand forces or to medium and long-term investment tools.

Goals and trends of HNWI depend on profit and loss laws and calculation of risks in any investment. Hence, we can say that the disorders in the real estate markets and finance channels are mainly attributed to the different decisions made by wealthy people. Moreover, this segment bears the largest share of responsibility for the collapses experienced by real estate and capital markets in the global economy. It has become remarkable that laws and legislation have become more cautious against the moves of capitalists and more efficient in monitoring them, with the purpose of minimizing the impact of capital movement and benefiting from the existence of such capitals in all circumstances. This depends on the availability of feasible investment opportunities as well as the examination of the potential risk levels at the target investment markets.

In this regard, Al Mazaya Holding’s Weekly Real Estate Report points out that in spite of the series of changes observed in major economic sectors, investment in real estate would remain the best type of investment for the HNWI population in the region and around the world. Luxury real estate products are at the top of their preference list, as they are adequately flexible in terms of liquidity factor.

Liquidity challenges and the decline in the volume of capital available for investment affect the HNWI’s plans for spending and investment, as the prices of the targeted real estate products have become within the limit of the targeted prices over the present period. On the other hand, it is not possible to ignore the fact that the HNWI, and clients in general, have become more conscious about the value and fair prices of real estate products today. Thus, they attempt to look for better investment opportunities.

Al Mazaya’s report asserts that the property markets of Dubai, Abu Dhabi and Doha represent the most targeted markets by GCC investors in general, and, in particular, Saudi as well as Kuwaiti investors. Challenges create opportunities for both capitalists and HNWI. Hence, unstable market conditions are considered among the best times to enter into real estate investment and enjoy the reduced prices, high investment values and returns on both the medium and long run.

On the other hand, Al Mazaya’s report reveals that real estate investment represents a core part of the long-term investment plans by young individuals who are planning for future retirement. They have current plans to benefit from the moves and firmness of real estate values as one of the available options to get the best returns upon retirement. The Report further states that early planning means allowing time to procure and save funds, besides acquiring a high level of professionalism and experience which enable them to make accurate investments with the least level of risks.

For young individuals, the real estate investment options are varied and cover several markets over the present period, including houses, villas and residential apartments, besides investment in offices and retail outlets, which secure fixed monthly rental income. This is one of the easiest types of real estate investment. In this regard, we should stress the importance of encouraging this type of investment among young people, which, in turn, would help protect the real estate market from fluctuations and secure the highest level of activity and balanced demand.

Investment in this market is of a long-term nature and does not aim at benefiting from market fluctuations for finalizing prompt sale and purchase transactions based on current price indicator. Rather, it aims to secure a net income for the investor in the long run, and optimizing of the values of basic investment with every rise in real estate value over time.

In this respect, Al Mazaya’s report points out that the capital required for investment would not be large or involve high risks. On the contrary, they would have plans for repayment on both short and medium runs. The total investment values to be provided would not be large, given the volume of liquidity available at the markets for financing purchase deals of small and medium-sized real property. That’s to say that securing about 70% of the value of target real property would be an easy task through obtaining loans and facilities from all finance channels. Repayment should be processed in monthly installments. Most often, this type of investment is a low risk one. The major risk here is the low rental value due to changes or shifts observed in the markets from time to time, noting that investment in real estate is considered an optimum choice under all circumstances for young individuals who are looking for methods which enable them to generate long-term stable returns – a source of income for the future. Providing finance to this segment of investors would involve low risk, as they are able to generate and maximize income over time.

It is probably the right time to call real estate companies all over the region to offer real estate products which target the ambitious and driven people in the community, who have both the skill and ability to maximize real estate investment values under all circumstances, away from the government plans which aim to provide decent housing for citizens. These plans would support the balance in markets, bridge the gap between the supply and demand and adjust prevailing prices. However, this constitutes a burden on national budgets, which reduce the ability of community members to save money and provide adequate capital for buying. It should be taken into consideration that if this approach is to continue, the productivity of a community as well as its ability to develop, will decline. The focus here will be on the individuals who are seeking to maximize investment values through their ability to select the best investment tools, based on the right interpretation and study of the real estate market indicators as well as growth indicators of the economic sectors and future forecasts. This focus would promote real estate investment values, stability and growth indicators at the level of market and economy, and would also increase the value of investment assets at the individual level.

It is important to provide real estate products which are convenient for particular segments in the community, due to the easy management of such projects by all parties: real estate developers, financers and local economy. Launching real estate projects and units that are convenient for young investors would increase demand indicators in the real estate market, restore the high level of liquidity and bring back investment to the right track, in addition to having a positive impact on real estate activity. On the other hand, various finance channels would be ready to seize investment opportunities generated by this activity through providing appropriate medium and long-term finance with the limit of well-studied and foreseen risk levels. It is worth mentioning that the availability of appropriate real estate products will increase the inflow of foreign investors, thus injecting more real estate liquidity that the market will be in need of more than ever.

Al Mazaya’s report stresses the importance of providing high levels of harmony among all stakeholders in the real estate market at the present time: individual, corporate and government. It is important to note that a large portion of real estate products offered at present is convenient for HNWI in the region and abroad – a matter which caused a wide gap between supply and demand, along with considerable challenges which make a large number of community members unable to invest at prevailing price rates. These properties are only affordable for high-income individuals and are not appropriate for individual investment, as this latter should include high level of returns, but they are unavailable due to high investment values as compared to its annual returns. In this regard, we should bear in mind that real estate markets are facing further risks due to the focus of investment on a particular target segment. All the challenges and crises experienced by real estate markets currently fail to address this trend.