High net-worth individuals (HNWI) in the Gulf are set to increase investments in real estate, continuing to see it as an attractive asset class, says Khaled Sifri, CEO at Dubai-based Emirates Investment Bank (EIB).
Speaking to MEED, Sifri says: It is an attractive asset because of its historical performance and the perception that is safe. People are, in general, more comfortable with seeing and recognising the physical asset in front of them, they have a natural infinity with real estate.
His comments follow the publication of new research conducted by the bank that found two-thirds of the GCC-based investors it surveyed are expected to put more of their money into property both in the region and globally, despite the recent booms and busts seen in real estate markets in recent years.
The HNWIs are defined as those investors with more than $2m or more in investable assets.
Buoyed by improving Gulf economies, strong predicted GDP growth and high government infrastructure spending, a large number of GCC investors are also becoming increasingly confident about regional investment opportunities.
The survey found that 64 per cent of the HNWIs surveyed said they preferred to invest in assets closer to home rather than globally, due to their confidence in the local economy.
This optimism is partially tempered by some hesitation regarding investments in countries still affected by the political instability that began across the Middle East in 2011.
Investors are also looking to book more of their assets in the Gulf and move them out of traditional European banking hubs, such as Switzerland or London, says Sifri.
There is a lot of evidence to suggest that this is happening quite aggressively, not necessarily becomes this region has a special pull, but because there is a big push out. Wealthy people that traditionally booked assets in European banks have been looking for other homes for them, he says.
This shift is partly driven by the increasing burden of regulation that European banks are implementing to safeguard themselves against a future banking crises.
If you are a wealthy person banking in Europe and the bank has stopped giving you the kind of service you were accustomed to getting, then you naturally look for somewhere else, says Sifri.
The survey also found that more than half of the investors questioned said they would prefer to have a local bank help manage their wealth.