Now is a good time to invest in property

This week's question comes from Ahmet, a 49-year-old branding director at a Dubai-based company. The Turkish national, whose monthly salary is Dh40,000, has an average monthly outgoing of about Dh15,000. His dependents include a wife and two children aged 12 and 14. Ahmet asks: "I have a sizeable stalled pension fund in Turkey, to which I haven't contributed to since leaving my last company when I and my family moved to Dubai over four years ago. I had paid into this fund for 20 years before arriving in the UAE. Since moving to Dubai I have somehow managed to save over Dh300,000, which is now lying in my UAE bank account earning no interest. I had been saving for the deposit on a villa for my family to live here in Dubai. We expect to stay here until my planned retirement in around 10 years. I didn't buy because the recession hit and property prices started plummeting. Regardless of the positive spin by real estate agents, I don't see the market booming again here. It is certainly too risky and uncertain for me, so I would like to invest it elsewhere. Can you help?"

You have excess income that can be used to achieve your personal financial goals in the future. There is also a large amount of capital sitting in your bank that is earning no interest. Our job is to help make this work for you.

Clearly, some of the capital will be needed as a deposit for a property and some should be used as an emergency fund. However, the capital should be moved to a short-term savings account that does pay interest but with no notice required for withdrawals.

Buying property is a difficult thing to predict if you are purchasing it as an investment. Firstly, you need a family home and renting is dead money as you will have no return. Dubai property prices are considerably lower than previously and now may be a good time to invest. It does depend on how you think prices will go long term. Investing in property elsewhere does itself bring risk.

You may be liable for tax if you rent out the property in the country where you own it and you will be placing your assets into a non-liquid asset class rather than perhaps diversifying your capital across many asset classes. I would also suggest you set up regular savings for your children's education planning as you have excess income.

Also, you may wish to consider investing for your retirement as you intend to retire at about age 60 and will probably need to enhance your pension fund. It is important that you seek reputable financial advice soon to begin these processes.

- Independent financial advisor Gavin Smith analyses readers' portfolios for Emirates Business. He is the Area Manager for consultants PIC, a member of the deVere Group of companies. Write to him at money@business24-7.ae

 WHAT DO YOU THINK? Do you think this is a good time to invest in property in the UAE? Write a comment below to share your thoughts.

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