Being a homeowner is UAE investors' top goal this year

UAE investors are bullish about reaching their financial goals this year with a vast majority (94 per cent) expecting to meet their targets. This puts the country on par with China, and second only to India, among the 23 markets surveyed for a new report.

Specifying these goals, UAE investors listed buying a new home (25 per cent), starting or investing in a new business venture (21 per cent) and retirement (13 per cent) as their top three goals.

Despite such priorities being typically long-term in nature, UAE investors overwhelmingly look at a short timeframe when evaluating investment success, with the majority (73 per cent) looking at a period between zero months to two years.

The 2015 Franklin Templeton Global Investor Sentiment Survey polled over 11,500 investors in 23 countries across the Americas, Africa, Asia Pacific and Europe.

Topping the list as UAE investors’ favourite investment was real estate, with 67 per cent believing the asset class to be among the most favoured asset classes in 2015, and 68 per cent over the next 10 years. Stocks (47 per cent) and precious metals (39 per cent) round out the top three.

Interestingly, optimism for the leading two asset classes for UAE investors, real estate and stocks, comes despite investors ranking these as the top two of three riskiest asset classes in 2015 and over the next 10 years.

Forty-three per cent ranked real estate as a top-three riskiest asset class for 2014 (40 per cent over the next decade), followed by an even 41 per cent for stocks in 2015 and over the next decade. Non-metal commodities rounded out the top three, no doubt an indicator of doubts over oil prices, with an even 34 per cent for both 2015 and the next 10 years.

The survey found that UAE investors are optimistic about the local stock market outlook but wary of the oil price decline.

Investor sentiment for the year ahead is more bullish, with 64 per cent believing the market will continue to move upwards, a distinct possibility as the UAE’s GDP growth in 2015 is projected by the IMF to grow by 3.2 per cent.

“The UAE continues to benefit from its long-standing policy of diversification away from oil. It has shown remarkable development as a tourism destination, a trade hub and a financial centre. There are also encouraging signs of regulatory reform, including the recently announced Companies Law, which will facilitate further IPO activity,” said Bassel Khatoun, Head of Mena Equity at Franklin Templeton Investments.

“This follows from the UAE's successful upgrade to MSCI Emerging Markets status last year. We continue to find high potential, compelling investment opportunities in these markets,” he said.

Shariah-compliant investment is garnering significance among investors in the UAE, with a significant majority (79 per cent) expressing interest in the space. When looking across the top three reasons for investing, ethical investing (40 per cent), strong performance (32 per cent), and less risk (31 per cent) are the top three most cited reasons.

"With over 1.5 billion Muslims worldwide, representing approximately one-fifth of the world's total population and growing at the fastest rate among all major religious groups, the fundamental case for Islamic finance is compelling,” said Mohieddine Kronfol, CIO, Global Sukuk and Mena Fixed Income, Franklin Templeton Investments.

“While the industry evolved initially as an alternative form of financial intermediation, primarily to meet Muslims’ desire for Shariah-compliant investments, it is now a complete and integral component of the mainstream global financial system,” he added.

Investors in the UAE are increasingly concerned about falling oil prices, with 39 per cent listing this as their top concern, followed by inflation (33 per cent) and the state of the global economy (30 per cent).

Dhiraj Rai, Director, Gulf and Eastern Mediterranean, Franklin Templeton Investments, said: "What we are seeing is a broad mix of indicators pointing to positive sentiment from UAE investors, albeit with the price of oil weighing on this sentiment. Despite this tempered view, we are particularly encouraged by the fact that investors in the UAE are overwhelmingly optimistic that they will reach their financial goals.”

When looking at factors that influence the decision to select a mutual fund, the survey revealed that more UAE investors tend to look to past performance, more than any other factor (24 per cent) followed by fund liquidity (16 per cent) and professional advice (15 per cent).

Meanwhile, the leading factor behind investors’ decision to sell a mutual fund was revealed as profit booking (25 per cent), followed by market volatility (24 per cent), and achievement of investment goals (24 per cent), with the remainder providing a range of other reasons to sell.

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