What's at Stake this week? | July 30, 2023

Dubai is once again seizing the spotlight, after its recent feat in the international luxury property market. Close to $850Mn (AED 3.1Bn) has gone into super prime assets, surpassing the records set by acclaimed luxury hubs such as London, New York, and Paris. Among the hundreds of transactions carried out, 176 surpassed the $10Mn threshold, with the crown jewel being the AED 420Mn unit in the up-and-coming Marsa Al Arab Hotel, now the most expensive apartment sold in Dubai to date. With Dubai serving as a magnet for global investors, off-plan sales are skyrocketing, going literally "off the charts"? and contributing to half of all property transactions as revealed by Allsopp & Allsopp's H1 Market Report. With its recent strides, Dubai is shaping up to be the next hotbed for luxury real estate…

?? Market Watch: Dubai Edition

Defying global trends: The UAE and Saudi Arabia come out on top!

As most global economies grapple with inflationary pressures, the UAE and Saudi Arabia, buoyed by strong government policies, have emerged as havens of economic stability. Their respective inflation rates in 2022 stood at a commendable 5% and 2.5% - significantly below the world average, a testament to the efficacy of their economic strategies, coupled with their adept handling of the pandemic which facilitated a swift resumption of economic and social activities.

Noteworthy among these strategies are their proactive government-imposed price control policies on essential goods and services, and robust social policies providing subsidies on basic goods, housing, education, and healthcare. These initiatives among others have successfully cushioned citizens against the rising cost of living, contributing to a more stable inflationary environment.

Last month, Dubai’s inflation rate slowed to an annual 2.05%, the lowest figure recorded so far in 2023 due to easing food and beverage prices as well as a decrease in transport costs, despite a slight rise in housing, utilities, and fuel expenses. Additionally, the city’s non-oil economy demonstrated robust growth, with business activity rising to a 10-month high in June, catalyzed by a sharp rise in sales and new orders. For the rest of the year, the UAE Central Bank anticipates an inflationary decline even further while Dubai's economy is forecasted to expand by 3.5%.

Looking at Saudi Arabia, recent government data highlighted a slight easing of the annual inflation rate to 2.7% in June from 2.8% in May. While certain costs like housing, utilities, and fuels increased by 9.1% and restaurant and hotel prices rose by 4.3%, the overall inflation trend remained downward since the year started at 3.4%, according to Reuters.

The bottom line? Despite global economies trending in the opposite direction, the likes of Gulf powers like the UAE and Saudi Arabia have proven they can mitigate against continued inflationary pressures through effective economic strategies and policies.

??Blog Highlights

How fractional ownership is bringing real estate to the masses

It is said that necessity is the mother of invention, and when the need arises, actions are initiated to establish valuable solutions or channels. In this case, investing digitally in real estate is now more accessible than ever to people all over the world! This enablement has had positive impacts on the sector's dynamism, transparency, and appeal to investors that were once unable to tap into the asset class.

Recently, the foundation of real estate investing has experienced major shifts with the advent of digital tech, with the intention to democratize traditional investment channels. With the rapid adoption of this modern technology, business models like fractional ownership have emerged as promising alternatives to traditional forms of ownership within real estate and other lucrative asset classes as well as a diverse set of industries.

The conventional approach to real estate investment, often required substantial capital to purchase an entire property, which often deterred individuals from taking part in real estate ventures. Traditional real estate ownership, or direct ownership presents significant challenges for potential investors, especially when it comes to the need for high upfront costs, demanding property management responsibilities that are time-consuming, and limited diversification opportunities exposing investors to higher risks as their funds remain tied up in a single property.

Where fractional ownership comes into play is that it allows multiple investors to collectively own a portion or fraction of high-value properties. Contrary to traditional real estate investments, instead of requiring substantial capital to purchase an entire property, investors can pool their resources and own a percentage of the asset proportional to their investment amount. Learn more about investing fractionally here !

Curious about the pros and cons of these two models?

The bottom line? The rise of digital technologies in real estate has majorly impacted the industry as it paved the way for more accessibility, transparency, and efficiency. By leveraging third-party property management services and utilizing an SPV structure, investors are now more capable than ever to explore new opportunities with confidence, spending their time focusing on what complements their personal goals rather than on settling for other investments (until recently the only available investments in small size were stocks and crypto), while earning a passive, second income.??