Afraid of investment risk- Seems you haven’t considered yet the risk of not being invested. A sarcastic none realistic view of someone’s ironic reality in the realty market.
We hear it daily. Afraid to invest now..
And here the question comes, do you have money set aside or not.
The shocking answer comes as a yes, I have money however afraid of the current market risk I am waiting to invest at the right time.
Let us study a market and a strategy.
Let’s take Dubai as the market.
Your strategy as the case study.
I believe you are the gent who was saying in 2002 that it won’t happen. You prefer to wait until the market sees real momentum. Don’t worry you were not alone at that time, I was skeptical about it too.
I also believe you are the same gent who said in 2004 that the market is running too high and it won’t continue. However you said you will wait for the definite fall (you predicted) and then you will buy at 2002 prices.
In 2006 you were searching for a bargain, you agreed that the trend is up and the time is right to buy however a bargain is inevitable.
2007 came; The amazing bargain with 2004 price didn’t come in 2006 so you said the market has no momentum left it has over grown it’s real potential.
In 2008 you have done 1 of 2 things.
Either bought something because you got bored of waiting. You found a bargain which is under construction so will not use your whole money, and since you are an expert in Real estate now with 6 years of extensive experience you will buy and exit with a profit. In this case you would have bought and lost money, so nothing left to worry about. Case study closed.
Or you continued waiting for the fall.
Hooray here it is. In 2008 end you tell everyone that you are the only one who predicted the market right. As what you analyzed and predicted happened. You lectured about it for ages, sat and gave every one who invested in his life a seminar on risk and finances. It even occurred to you that you should write a book, start a real estate university, and open a real estate development company.
2009 came.. the lecturing continued, you gave dates and exact time for your prediction of when the trend will flip. You mocked every analyst as you thought they were naïve and have a hidden agenda.
2010 you said that the market will continue dropping until 2:00 pm 30th of February 2012 and you developed your future buying strategies based on that. You told everyone wait, it will continue dropping, I am only advising you because I want you to succeed in investing like me.
2011 you were waiting for the date and time you set, when the market started turning around. You crunched the numbers again and confirmed to your followers now that it is a temporary blip. It will fall again soon. You reassured them that the date you set stands.
2012 the market continued. You understood something was different, again you launched your search for the ultimate bargain, a bargain with a 2010 price of a development you loved.
2013 came. Wow this fast. Now you understood that the trend is moving on. You changed your expectation to search for a bargain with a 2012 price. You refused to buy at the new price as it is ridiculous you thought.
2014 you sensed using your great sense of market direction that the prices would crash. It didn’t. it dropped slightly, you asked your followers to wait, 2015 is the killer year.
In 2015 the drop continued although not a big one however a considerable good 10to 15% drop. You turned directly round and promised them a crash and announced that your dates never fail. You even gave very one examples of when you went right.
Here you are in 2016 Sir. Do you mind me calling you Sir..
I will not continue with any further prediction of your coming actions. I’ll only point out the result of your past action.
You have spent 1,960,000 AED in rent.
You have lost 4 to 9 % a year of your buying power due to inflation.
You have saved 2.3 million AED all through the years ( and in your consideration survived two market dips and one crash- which saved you 40 to 60% of the property value at the time of fall, although regardless of the time of purchase if you only missed the peaks most of this loss would have been loss of profit, not capital)
You are now planning to wait for the coming market bottom.
You were afraid of investment risk- I think you have noticed by now the risk of not being invested. Pardon me sir for being harsh; call this please a sarcastic none realistic view of someone’s ironic reality in the realty market. However make your move.
Results maybe a drop in price, yes they may. How much would your loss be? Definitely less that your loss till our current date.
Property is the only cow that gives you milk, and never dies.
It may go down in value however it does have an intrinsic one.
Not investing to flee risk, is similar to stopping the watch to save time.
By Makram H. Hani
C.E.O. Arms &McGregor International Realty®
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