Arabian Business Money Forum: How COVID-19 Sparked Real Estate Investment

Function Key note speeches and Panel Discussions AB Forum 2019 Waldorf Astoria Palm jumeirah Dubai, United Arab Emirates, October 28, 2019 (Photo by Aasiya Jagadeesh/ITP Images)

By Akanimo Sampson

Speakers in the final panel of the inaugural Arabian Business Money Forum have disclosed that investors are shoring up their portfolios in real estate. According to them, beyond stocks, funds, and real estate, investors are also increasingly rounding out their portfolios with assets in art and watches as the past year has increased appetite for investments.

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With more people working from home as part of the measures to curb the spread of coronavirus last year, upgrading to bigger residences with more outdoor space has driven investments in real estate, said Henry Faun partner, private office at Knight Frank.

“On the commercial side, many offices remain vacant to this day so business owners and investors of offices that are looking to those investments now say what’s happening for those in the future”, he said.

Given their added educational value, London, New York and Boston remain real estate investment hotspots for GCC investors, as does the south of France.

In the mean time, Dubai is attracting real estate investments from High Net Worth-Individuals (HNWIs) looking for a second home in a city where coronavirus related measures have somehow eased up.

“The local real estate market has seen a huge increase in big villa value, some up to 30 percent. HNWIs clients coming from Europe are looking for a second home here, particularly one refurbished to European standards”, said Faun.

Falling into the emotionally-driven investment categories, both watches and art share similar qualities that make them attractive assets in a portfolio.

Both are easily movable assets, are valuable because of their rarity and have tax advantages, agreed the panellists covering these categories.

They are both long-term investments, however, and need to be and are not meant to be flipped months after they are purchased.

“Art, like watches, isn’t purchased to be flipped. With the galleries I represent, for artists who are still producing, we need to ensure they hold on to it… buyers can’t resell for a set period of time,” said Michael Kortbawi, partner at BSA Ahmad Bin Hezeem law firm.

“It’s your right to resell an art piece, but if you buy a piece and then resell on speculation, you will be blocked by the community from buying more”, he continued.

In order to prevent a quick reselling of a watch, for example, some brands won’t deliver a warranty for a year, said Frédéric Watrelot, senior specialist at Sotheby’s.

“Some watches are very difficult to get, you may make money off these. There are many that remain affordable and are retaining their value many years on”, said Watrelot.