Some 35 years after buying my first home, and as I am about to retire as a personal finance columnist, it seems like a good time to review my best lifetime investment.
There have been a few great performers during that period in my financial portfolio: Emaar shares; a modest pension plan that turned into a decent lump sum and my own business, which I sold before the global financial crisis of 2008-09. But nothing has really topped simple residential real estate. So, why is that?
Buying a house in a depressed market with lower than average prices is the surest way to improve your return on residential property …
Well, I have saved 35 years of rent for a start, or better still earned money from rent when a company paid for my apartment in Dubai.
Then, there was house price inflation. Of course, there were a few years when prices fell but overall the direction has been up and up. At the same time, mortgage rates gradually fell and so did the mortgage payments. There came a time when I was finally able to pay it off 13 years ago, and that early repayment saved 8 per cent on interest alone. Keeping money in the bank instead would have earnt 6 per cent in interest, which is unbelievable today.
Meanwhile, my salary benefited from the same rising inflation and a gradual move up the media ladder.
The financial engineering that makes home ownership work is straightforward and easy to understand. When buying a residential property, most buyers take a large loan at a fixed point in time and make a big investment. You immediately have a serious amount of money at work on your behalf.
You do not have to drip feed into an investment plan for years to accumulate a decent sum, and only then find that it is not enough to fund your retirement due to fraud, unsound management or a bear market. Bricks-and-mortar are solid and not a paper asset; you can see and feel what you own.
The other main reason why residential property investment works so well is that everybody has to live somewhere and expects to pay up to a third of whatever their income is to do so.
You have a situation of very stable demand and generally stable cash flow. Any investment expert could come up with a moneymaking plan with those inputs.
That’s why in my long career as a financial journalist – which included a decade writing about real estate in the UK – I have met many more people whose financial success has been mainly down to buying residential property than those who have done so through business or investing in the stock market.
Not surprisingly when I moved to the UAE and it became possible to buy residential property, I was literally one of the first in the queue. How many of my older friends today are considerably richer because they did the same thing? Quite a few.
But there will always be people who tell you not to do it. My lawyer told me emphatically not to buy in Dubai. He did later admit to being completely wrong.
So where do we stand today? When I left the UK there were many dire warnings about house prices being far too high. Yet they have more than tripled since then.
To repeat the difference from share investment schemes: you put a large capital investment to work for you from day one, usually borrowed from a mortgage provider. You do not have to slowly accumulate capital from your own savings.
However, the current very high valuations in UK property do make the likely future returns lower than in the past. That said, the British government will likely have to keep on printing money to devalue its debts via inflation, and housing is a much better hedge against inflation than stocks or bonds.
That’s because salaries will rise with inflation, while the amount you borrow from a mortgage provider is fixed at the time of purchase. Of course, you have to be wary of interest rates rising to combat inflation, but your actual debt will never change from the day you bought, unless you choose to pay it off. Any gain in house prices is therefore all profit for you.
Buying a house in a depressed market with lower than average prices is the surest way to improve your return on residential property, as with pretty much with every other asset class. However, you are unlikely to be able or willing to borrow such a large amount to invest from day one for other assets, so you will never be able to achieve the same total return.
What you don’t ever want to do with real estate is to have to sell if prices temporarily fall. Your mortgage payments may drop too under such circumstances as interest rates often move lower in bad times. If you lose your job then get another one, or just rent your house out and live somewhere cheaper.
Residential property is just so much more flexible than the alternatives, and the substantial size of your initial investment is the real key to its high rate of return over the long term.
Peter Cooper retires after spending more than 25 years writing about Gulf finance
_______________
Gallery: 'The White House' of Palm Jumeirah: Inside a Dh65m villa
UAE currency: the story behind the money in your pockets
UAE currency: the story behind the money in your pockets
The specs
Engine: 2.0-litre 4-cyl turbo
Power: 201hp at 5,200rpm
Torque: 320Nm at 1,750-4,000rpm
Transmission: 6-speed auto
Fuel consumption: 8.7L/100km
Price: Dh133,900
On sale: now
CHATGPT%20ENTERPRISE%20FEATURES
%3Cp%3E%E2%80%A2%20Enterprise-grade%20security%20and%20privacy%3C%2Fp%3E%0A%3Cp%3E%E2%80%A2%20Unlimited%20higher-speed%20GPT-4%20access%20with%20no%20caps%3C%2Fp%3E%0A%3Cp%3E%E2%80%A2%20Longer%20context%20windows%20for%20processing%20longer%20inputs%3C%2Fp%3E%0A%3Cp%3E%E2%80%A2%20Advanced%20data%20analysis%20capabilities%3C%2Fp%3E%0A%3Cp%3E%E2%80%A2%20Customisation%20options%3C%2Fp%3E%0A%3Cp%3E%E2%80%A2%20Shareable%20chat%20templates%20that%20companies%20can%20use%20to%20collaborate%20and%20build%20common%20workflows%3C%2Fp%3E%0A%3Cp%3E%E2%80%A2%20Analytics%20dashboard%20for%20usage%20insights%3C%2Fp%3E%0A%3Cp%3E%E2%80%A2%20Free%20credits%20to%20use%20OpenAI%20APIs%20to%20extend%20OpenAI%20into%20a%20fully-custom%20solution%20for%20enterprises%3C%2Fp%3E%0A
The specs
Engine: 4.0-litre V8 twin-turbocharged and three electric motors
Power: Combined output 920hp
Torque: 730Nm at 4,000-7,000rpm
Transmission: 8-speed dual-clutch automatic
Fuel consumption: 11.2L/100km
On sale: Now, deliveries expected later in 2025
Price: expected to start at Dh1,432,000
DEADPOOL & WOLVERINE
Starring: Ryan Reynolds, Hugh Jackman, Emma Corrin
Director: Shawn Levy
Rating: 3/5
COMPANY%20PROFILE
%3Cp%3E%3Cstrong%3ECompany%20name%3A%3C%2Fstrong%3E%20Clinicy%3Cbr%3E%3Cstrong%3EStarted%3A%3C%2Fstrong%3E%202017%3Cbr%3E%3Cstrong%3EFounders%3A%3C%2Fstrong%3E%20Prince%20Mohammed%20Bin%20Abdulrahman%2C%20Abdullah%20bin%20Sulaiman%20Alobaid%20and%20Saud%20bin%20Sulaiman%20Alobaid%3Cbr%3E%3Cstrong%3EBased%3A%3C%2Fstrong%3E%20Riyadh%3Cbr%3E%3Cstrong%3ENumber%20of%20staff%3A%3C%2Fstrong%3E%2025%3Cbr%3E%3Cstrong%3ESector%3A%3C%2Fstrong%3E%20HealthTech%3Cbr%3E%3Cstrong%3ETotal%20funding%20raised%3A%3C%2Fstrong%3E%20More%20than%20%2410%20million%3Cbr%3E%3Cstrong%3EInvestors%3A%3C%2Fstrong%3E%20Middle%20East%20Venture%20Partners%2C%20Gate%20Capital%2C%20Kafou%20Group%20and%20Fadeed%20Investment%3C%2Fp%3E%0A
LILO & STITCH
Starring: Sydney Elizebeth Agudong, Maia Kealoha, Chris Sanders
Director: Dean Fleischer Camp
Rating: 4.5/5
TICKETS
For tickets for the two-day Maharlika Pilipinas Basketball League (MPBL) event, entitled Dubai Invasion 2019, on September 27 and 28 go to www.meraticket.com.
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ACL Elite (West) - fixtures
Monday, Sept 30
Al Sadd v Esteghlal (8pm)
Persepolis v Pakhtakor (8pm)
Al Wasl v Al Ahli (8pm)
Al Nassr v Al Rayyan (10pm)
Tuesday, Oct 1
Al Hilal v Al Shorta (10pm)
Al Gharafa v Al Ain (10pm)
Killing of Qassem Suleimani
More on animal trafficking
EMERGENCY PHONE NUMBERS
Estijaba – 8001717 – number to call to request coronavirus testing
Ministry of Health and Prevention – 80011111
Dubai Health Authority – 800342 – The number to book a free video or voice consultation with a doctor or connect to a local health centre
Emirates airline – 600555555
Etihad Airways – 600555666
Ambulance – 998
Knowledge and Human Development Authority – 8005432 ext. 4 for Covid-19 queries
F1 The Movie
Starring: Brad Pitt, Damson Idris, Kerry Condon, Javier Bardem
Director: Joseph Kosinski
Rating: 4/5
UAE currency: the story behind the money in your pockets
UAE squad
Esha Oza (captain), Al Maseera Jahangir, Emily Thomas, Heena Hotchandani, Indhuja Nandakumar, Katie Thompson, Lavanya Keny, Mehak Thakur, Michelle Botha, Rinitha Rajith, Samaira Dharnidharka, Siya Gokhale, Sashikala Silva, Suraksha Kotte, Theertha Satish (wicketkeeper) Udeni Kuruppuarachchige, Vaishnave Mahesh.
UAE tour of Zimbabwe
All matches in Bulawayo
Friday, Sept 26 – First ODI
Sunday, Sept 28 – Second ODI
Tuesday, Sept 30 – Third ODI
Thursday, Oct 2 – Fourth ODI
Sunday, Oct 5 – First T20I
Monday, Oct 6 – Second T20I
The%20Killer
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Scores
Oman 109-3 in 18.4 overs (Aqib Ilyas 45 not out, Aamir Kaleem 27) beat UAE 108-9 in 20 overs (Usman 27, Mustafa 24, Fayyaz 3-16, Bilal 3-23)
Key recommendations
- Fewer criminals put behind bars and more to serve sentences in the community, with short sentences scrapped and many inmates released earlier.
- Greater use of curfews and exclusion zones to deliver tougher supervision than ever on criminals.
- Explore wider powers for judges to punish offenders by blocking them from attending football matches, banning them from driving or travelling abroad through an expansion of ‘ancillary orders’.
- More Intensive Supervision Courts to tackle the root causes of crime such as alcohol and drug abuse – forcing repeat offenders to take part in tough treatment programmes or face prison.
Fixtures and results:
Wed, Aug 29:
- Malaysia bt Hong Kong by 3 wickets
- Oman bt Nepal by 7 wickets
- UAE bt Singapore by 215 runs
Thu, Aug 30: UAE v Nepal; Hong Kong v Singapore; Malaysia v Oman
Sat, Sep 1: UAE v Hong Kong; Oman v Singapore; Malaysia v Nepal
Sun, Sep 2: Hong Kong v Oman; Malaysia v UAE; Nepal v Singapore
Tue, Sep 4: Malaysia v Singapore; UAE v Oman; Nepal v Hong Kong
Thu, Sep 6: Final
1971: The Year The Music Changed Everything
Director: Asif Kapadia
4/5
Sole survivors
- Cecelia Crocker was on board Northwest Airlines Flight 255 in 1987 when it crashed in Detroit, killing 154 people, including her parents and brother. The plane had hit a light pole on take off
- George Lamson Jr, from Minnesota, was on a Galaxy Airlines flight that crashed in Reno in 1985, killing 68 people. His entire seat was launched out of the plane
- Bahia Bakari, then 12, survived when a Yemenia Airways flight crashed near the Comoros in 2009, killing 152. She was found clinging to wreckage after floating in the ocean for 13 hours.
- Jim Polehinke was the co-pilot and sole survivor of a 2006 Comair flight that crashed in Lexington, Kentucky, killing 49.
Company%20Profile
%3Cp%3E%3Cstrong%3ECompany%3A%3C%2Fstrong%3E%20Astra%20Tech%3Cbr%3E%3Cstrong%3EStarted%3A%20%3C%2Fstrong%3EMarch%202022%3Cbr%3E%3Cstrong%3EBased%3A%20%3C%2Fstrong%3EDubai%3Cbr%3E%3Cstrong%3EFounder%3A%20%3C%2Fstrong%3EAbdallah%20Abu%20Sheikh%3Cbr%3E%3Cstrong%3EIndustry%3A%3C%2Fstrong%3E%20technology%20investment%20and%20development%3Cbr%3E%3Cstrong%3EFunding%20size%3A%3C%2Fstrong%3E%20%24500m%3C%2Fp%3E%0A
The five new places of worship
Church of South Indian Parish
St Andrew's Church Mussaffah branch
St Andrew's Church Al Ain branch
St John's Baptist Church, Ruwais
Church of the Virgin Mary and St Paul the Apostle, Ruwais
Rashid & Rajab
Director: Mohammed Saeed Harib
Stars: Shadi Alfons, Marwan Abdullah, Doaa Mostafa Ragab
Two stars out of five
It Was Just an Accident
Director: Jafar Panahi
Stars: Vahid Mobasseri, Mariam Afshari, Ebrahim Azizi, Hadis Pakbaten, Majid Panahi, Mohamad Ali Elyasmehr
Rating: 4/5
Directed by Sam Mendes
Starring Dean-Charles Chapman, George MacKay, Daniel Mays
4.5/5
MOUNTAINHEAD REVIEW
Starring: Ramy Youssef, Steve Carell, Jason Schwartzman
Director: Jesse Armstrong
Rating: 3.5/5
Read more from Johann Chacko
WHAT IS A BLACK HOLE?
1. Black holes are objects whose gravity is so strong not even light can escape their pull
2. They can be created when massive stars collapse under their own weight
3. Large black holes can also be formed when smaller ones collide and merge
4. The biggest black holes lurk at the centre of many galaxies, including our own
5. Astronomers believe that when the universe was very young, black holes affected how galaxies formed
'Hocus%20Pocus%202'
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The%20specs
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Ponti
Sharlene Teo, Pan Macmillan
LOS ANGELES GALAXY 2 MANCHESTER UNITED 5
Galaxy: Dos Santos (79', 88')
United: Rashford (2', 20'), Fellaini (26'), Mkhitaryan (67'), Martial (72')
If you go
The Flights
Emirates and Etihad fly direct to Johannesburg from Dubai and Abu Dhabi respectively. Economy return tickets cost from Dh2,650, including taxes.
The trip
Worldwide Motorhoming Holidays (worldwidemotorhomingholidays.co.uk) operates fly-drive motorhome holidays in eight destinations, including South Africa. Its 14-day Kruger and the Battlefields itinerary starts from Dh17,500, including campgrounds, excursions, unit hire and flights. Bobo Campers has a range of RVs for hire, including the 4-berth Discoverer 4 from Dh600 per day.
