Hedging the property storm: Investing in falling and rising property markets

The U.S and European property markets are either falling or stagnating with the UAE Markets consistently growing. The conditions for profit taking could not be more opportunistic in the East and the West, as such property investors should invest in both falling and rising property markets as an investment strategy.

While Western European and U.S economies head for recession the situation in the United Arab Emirates could not be more different. According to their respective Chambers of Commerce Abu Dhabi's GDP is expected to grow by over 10% per year in 2008. Due to flourishing non-oil related sectors the economy is set to grow 4 fold by 2025. In Dubai GDP growth is projected to average 11% p.a over the next 8 years. The economics have helped to support a UAE property market that is seeing growth of 10-20% per year, with excellent rental yields in Abu Dhabi due to property shortages .

With the economic slowdown in the Western economies and crisis in the property markets, opportunities for funds with available cash to purchase cheap distressed assets are emerging. Such funds which are currently focusing on financial and property related assets are commonly referred to as Vulture Funds. Whilst strong banks take over crippled competitors in the property industry, over exposed developers and investors unable to obtain finance are at their weakest. Property Vulture Funds are already focusing on North America and will no doubt extend their remit to Western Europe.

Source: Lanesborough Asset Management

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