investment objectives

5 Key Questions You Must Ask Yourself Before Investing!

I always recommend that clients consult with a financial advisor prior to embarking upon the purchase of a property. Investing in property requires careful planning and a clear understanding of what it will entail.

How much do you really know about property as an investment?

You must have some knowledge about any investment that you might be considering. Property is no different. The old adage of “Don’t invest in anything you don’t know” applies. You may not be an expert, but you need to be able to communicate intelligently and knowledgeably with the experts.

Do some homework on the industry and gain an understanding of where the industry is now, where it is headed and what is driving its direction and development. “Get a feeling of its composition and what it has to offer you in terms of wealth generation opportunities, how you might be able to engage those opportunities and when you envisage starting your foray into the property investing space.”

It’s difficult for anybody to accurately assess opportunities and the risks associated with those opportunities if they have little knowledge of what it is they are investing in.

 

Are your investment objectives clearly defined and well considered?

As with any investment, investing in property is all about recognizing and capitalizing on opportunities that are consistent and supportive to your overall wealth accumulation objectives.

You must have a clear understanding of what you are trying to achieve and what role your property portfolio will play within a larger diversified investment portfolio. What proportion of your total investment portfolio is allocated towards property? towards stocks or bonds? towards gold or commodities? Etc.

The only person who can determine what you are trying to achieve is you so be sure you know you’re your objectives are before doing anything.

 

What is your source of finance?

Needless to say, investing in property is often a capital intensive exercise and, depending on your strategy, returns can be subject to relatively long lead times. A sufficient and robust finance plan is essential. What is your source of finance and where do the greatest risks lie in the event of an economic downturn or change in circumstances? How liquid might you need to be? How exposed will you be to interest rate increases and or exchange rate fluctuations? What level of gearing or leverage are you comfortable with? Will you be able to preserve capital invested in your property portfolio during cyclical swings in the market or will you need to move capital among portfolios?

All these questions (and many more) need to be addressed and the more skillful you are at conceptualizing your wealth generation schematic, the greater your likelihood of generating successful strategies to grow your wealth.

 

Do you have a financial advisor? (That you trust)

I always recommend that clients consult with a financial advisor prior to embarking upon the purchase of a property. Investing in property requires careful planning and a clear understanding of what it will entail; the effects it will have on lifestyle, the risks it may pose, the stresses that may emerge while, at the same time, the benefits of generating wealth in, what can be, a very lucrative industry . A financial advisor can help you understand and assess all these elements by helping you determine what you actually need to do (or do without) to achieve your objectives.

Ask yourself if you know definitively what you can afford, how best to use available finance, how to accurately assess alternative investment options, how best to utilize your current assets and how investing in real estate is going to enable you to grow your wealth in the future. A financial advisor will view your investment as one part of your overall financial landscape and should be able to guide you into committing the right type and the right amount of resources to acquiring that dream home that everybody aspires to.

As with any investment, investing in property is all about recognizing and capitalizing on opportunities that are consistent and supportive to your overall wealth accumulation objectives.

 

Do you have a team of professionals (that you trust) who can assist you in your quest?

Are you able to identify, engage and work with a professional in the industry? Do you have the skill to select the right agency? Do you know what separates professionals that will provide you with tangible added value rather than simply line their pockets with your money? It’s up to you to choose wisely and remember, cheapest is not always best. Do you know where to find an experienced and passionate team with people who really enjoy what they are doing? An agency that exhibits a breadth and depth of industry knowledge and expertise? This is important. Look for longevity and evidence of good relationships with key industry stakeholders such as the major developers or authorities such as the Dubai Land Department, RERA, DEWA or Economic Department. And finally, look for an agency that has received some form of Industry or peer recognition. These are the hardest plaudits to get! ■

Preparation is the key

The Cityscape Global Conference provides tremendous knowledge-sharing opportunity to investors

As a proud real estate professional, there is no more exciting time for me than when Cityscape Global opens its doors in Dubai and showcases to the world what a fantastic industry we have. And that time is rapidly approaching – Cityscape Global is just around the corner and this year’s edition will be as exciting and informative as those in years past.

For buyers and investors, there is no better place to gain an appreciation of the myriad opportunities on offer. I always advise my clients that the best way to get the most out of the event is to canvas all the interesting opportunities on display and gradually yet efficiently establish a shortlist of the best opportunities.

Establishing such a list from an exhibition as huge as Cityscape is not easy and requires a disciplined approach. This is where a property asset management professional can assist and it’s a role that keeps me extremely busy with my clients over the entire period that Cityscape is open and for some weeks subsequent to its conclusion.

A lot of the work in ensuring that investors and potential buyers make the most of their Cityscape experience is actually done beforehand in preparing an understanding of what the overall investment environment looks like. This enables efficient and focused assessment of all that is on offer.

It’s also important for investors to understand what they want to invest in and what their investment objectives are. Too many investors formulate the answers to these questions “on the run” during the exhibition. This lack of preparation just leads to confusion and ultimately poor decision-making.

As a general theme this year, I am advising most of my investors to look for value opportunities in the affordable housing segment, particularly in Dubai South, as this segment in this location is likely to be the subject of some very attractive easy payment plans to further enhance affordability and, to some extent, mitigate risk.

This segment has outperformed its more luxurious alternatives for some time now and continues to show potential, even through the recent cyclical correction. And while the value is irrefutable, the risks associated with investing in the afford-able segments of the industry as opposed to the luxury segments are much lower.

But not every Cityscape attendee will have a check book in hand. The Cityscape Global Conference, which is held as a precursor event at the Conrad Hotel on September 10, is a fantastic opportunity to gain a high level of understanding of the factors shaping the industry. This conference always forms part of my preparation for the exhibition and I always recommend that my investor clients avail themselves of this tremendous knowledge sharing opportunity.

The developers who do well out of Cityscape are those who utilize the event as a part of an overall “go to market” strategy. Prior preparation of at least 12 months in will increase the chances of maximizing the returns from participating in the event.

So, for those of us with a passion for the industry, it is going to be an exciting three days. It always seems to end too early!