Long-term stability trumps currency considerations

Currency fluctuation is always an important component of decision-making for cross border investors. The relative current strength of the dirham (pegged to the dollar) makes acquisition in, for instance, the Eurozone, Australia or Turkey very attractive compared to early 2014.

On the other hand, buyers from these markets looking at the GCC will find their purchasing power is now reduced.

However, buying on the basis of the current currency rates is not as straightforward as the advantages and disadvantages above would suggest as most professional investors will look at their provisional exit plan on purchase.

For the local market, perhaps the more important consideration is the long-term stability and prospects for growth that the UAE provides. Dubai’s economic diversity and continuing attractiveness as a home for regional headquarters will ensure that buyer demand — both residential and commercial — remain strong. As we have seen over the last few months, the market’s ability to gently self-correct against unsustainable pricing levels provides some insulation against deeper corrections.

Ultimately, however, all successful global markets depend on developers/investors anticipating future demand. Markets where demand just outstrips supply will attract the greatest amount of investor sentiment.



Source: Nick Maclean, Special to Gulf News

The writer is the Managing Director of CBRE Middle East.


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