As the UAE continues to solidify its position as a global economic hub, investors are keen to understand the best strategies for navigating the financial landscape in 2024.
Industry experts have shared their insights on promising sectors, investment opportunities, and potential challenges that lie ahead.
Here are the best assets to invest in 2024, according to experts:
What UAE assets should you be investing in this year?
The UAE economy is poised for growth across sectors in the coming year. Real estate, particularly in Dubai and Abu Dhabi, remains a robust market with strong demand for both residential and commercial properties, according to Dr. Ryan Lemand, Co-founder and CEO of Neovision Wealth Management in Abu Dhabi.
“The financial services sector is also expected to do well, driven by robust banking performance and digital transformation initiatives. Additionally, the tourism and hospitality sectors are rebounding strongly post-pandemic, supported by high-profile events and increasing international visitor numbers. The renewable energy sector is set to grow significantly, aligned with the UAE’s sustainability goals and investments in solar and wind projects,” he said.
In addition, sectors such as technology, healthcare, and renewable energy are poised for ongoing and potential growth, “from a global stocks perspective,” Mike Coady, a financial advisor in the UAE with over 20 years’ experience in the financial industry told Arabian Business.
“The tech sector continues to thrive due to ongoing advancements in AI, cybersecurity, and cloud computing. Healthcare remains robust, driven by innovations in biotechnology and a global emphasis on health and wellness. Renewable energy is also gaining momentum as countries worldwide push for sustainable and environmentally friendly energy sources,” he said.
UAE real estate market has ‘incredible future’ as it is set to undergo changes in 2024
However, when considering asset allocation for 2024, both experts emphasised the importance of diversification.
While real estate continues to be a strong choice, especially in prime locations within Dubai and Abu Dhabi, government and corporate bonds provide stability and steady income, while commodities like gold are expected to retain their value as a hedge against inflation and economic uncertainty.
Meanwhile, the UAE real estate market is expected to undergo changes in the coming year, the experts revealed.
“Naturally, there are those investors that see a correction at some point and of course there are those that have the continued confidence that Dubai, and UAE for example, will continue to grow in prices as demand continues to be strong. That said, like any investment, real estate will have its ups and downs but I do believe that most investors and expatriates would believe that the UAE has an incredible future and in many cases in undervalued against some of its global city counter parts,” Coady said.
Echoing the sentiment, NeoWealth’s Dr. Lemand added that government initiatives to attract foreign investment and residency are likely to increase demand for properties.
“Innovations in property technology (proptech) are transforming how real estate transactions are conducted, making them more efficient and transparent. Additionally, there is a growing focus on sustainable and smart buildings, driven by both regulatory pressures and consumer preferences for eco-friendly living spaces,” he said.
Gold is a ‘safe-haven’ asset in 2024
As mentioned earlier, both experts also advised that gold and commodities are expected to maintain their upward trajectory in the near term.
Ongoing global economic uncertainties and geopolitical tensions support gold’s status as a “preferred safe-haven asset,” according to Dr. Lemand.
“Gold remains a preferred safe-haven asset, offering protection against inflation and currency fluctuations. Commodities such as oil and natural gas could also see price increases due to supply constraints and rising demand. However, investors should monitor market dynamics closely, as major policy shifts or economic developments could impact these assets’ performance,” he explained.
Moreover, emerging investment opportunities are presenting themselves in sectors such as green hydrogen and artificial intelligence, he said, adding that green hydrogen has the “potential to revolutionise” industries as a clean energy source.
“Artificial intelligence and machine learning technologies are creating new investment opportunities, particularly in data analytics, automation, and cybersecurity. Another potential surprise asset could be non-fungible tokens (NFTs), which have shown remarkable growth in digital art and collectibles markets, though they come with higher volatility and risk,” he said.
Global elections, economic policies, geopolitics to influence investment returns in 2024
Adding to this, Coady called on investors to be aware of these emerging investment trends.
“[Cryptocurrencies, blockchain technologies, etc.] These digital assets have gained significant traction and offer high potential for returns, although they come significant volatility. Additionally, sectors like space exploration and vertical farming are attracting investment and could outperform traditional expectations. These innovative fields represent the future of technology and sustainability, making them intriguing options for forward-thinking investors,” he said.
Other several factors that could impact investment returns in 2024 such as a number of developed countries are holding elections, according to Coady.
“This year is expected to be a record-breaking year for elections globally, with more than 50 countries heading to the polls. Some key developed countries with upcoming elections include the United States, various European Union member states, and other nations such as Japan and Australia,” he said.
Other factors – Coady said – include:
- Economic Policies: Changes in interest rates, tax policies, and government spending can influence market performance.
- Geopolitical Events: Political instability, trade tensions, and international relations can affect global markets.
- Technological Advancements: Innovations and disruptions in technology can create new opportunities and risks.
- Environmental Factors: Climate change and environmental regulations can impact industries and investment choices.
- Consumer Trends: Shifts in consumer behaviour and preferences can drive the success or failure of various sectors.
Look for investments in emerging markets, cryptocurrencies, tech startups
For those willing to take on more risk, both Dr. Lemand and Coady suggested considering investments in emerging markets, cryptocurrencies, and tech startups.
“Investing in growth stocks, emerging markets, and alternative assets like cryptocurrencies can offer high potential returns. To hedge against inflation and currency fluctuations, consider investments in commodities such as gold, real estate, and inflation-protected securities (TIPS). Diversifying across different asset classes and geographies can also help mitigate risks and protect your overall portfolio. Not everybody likes the approach, but diversification is always a sensible must,” Coady said.
Dr. Lemand recommends investing in sector-specific ETFs, especially in technology, healthcare, and clean energy. These ETFs offer exposure to fast-growing industries while spreading risk. This approach allows investors to benefit from sector growth without picking individual stocks.
“To protect against inflation and currency fluctuations, commodities like gold and real estate in stable regions are reliable choices. Additionally, considering inflation-linked bonds can provide a safeguard against rising prices. With interest rates high, we would suggest avoiding the use of leverage to boost returns,” he said.
Dr. Lemand further suggested UAE investors also look at opportunities abroad. He highlighted Asia, including both developed and emerging markets, as a promising region for investment, especially as China’s economy shows signs of recovery from its property market downturn.
“Sectors such as infrastructure, technology, and consumer goods are particularly attractive in these regions. Additionally, the European renewable energy market offers compelling opportunities, with various countries investing heavily in green energy projects. Investing in global diversified funds can also help mitigate risks associated with political and economic instability in individual markets,” he said.
Coady agreed, suggesting that investing in international real estate, especially in popular city centres, can be profitable. He also pointed out that renewable energy, technology, and healthcare sectors in developed markets offer strong investment opportunities due to their ongoing innovations.
“The S&P 500 has been outperforming the MSCI World Index for an unprecedented duration, marking the longest period of outperformance in history. This trend began around 2009, following the financial crisis, and has continued through to the present day. This is the longest outperformance in history and from a data perspective, may start to signal the importance of global diversification,” he said.
So, what are some tips for individual investors when putting a plan together?
When creating an investment plan, individual investors should start by defining their financial goals, risk tolerance, and investment horizon, according to Dr. Lemand.
“Diversification is key to mitigating risk, so spreading investments across different asset classes and geographies is essential. Regularly reviewing and adjusting the portfolio in response to market changes and personal financial circumstances is also important. Seeking advice from financial advisors and staying informed about market trends and economic developments can further enhance investment decisions,” he explained, adding that it is also “crucial” for investors to stay flexible and alert to new opportunities as markets change. He noted that the UAE is evolving rapidly, and investors should watch for new IPOs and emerging companies to invest in.
Looking ahead to 2024, Coady gave the following tips when putting together an investment plan:
- Set clear goals: Define your short, medium and long-term financial objectives. By setting clear goals, you will better understand the goals needed to achieve targets.
- Diversify: Spread your investments across various asset classes to reduce risk.
- Stay informed: Keep up with market trends, economic news, and investment opportunities.
- Risk management: Understand your risk tolerance and adjust your portfolio accordingly.
- Seek professional advice: Consult with a good and reputable financial advisor to tailor a strategy that aligns with your goals and risk profile.
“Regularly review and adjust your investment strategy to align with changing market conditions and personal goals. Always prioritise financial education to make informed and able to be more confident in your investment decisions,” he concluded.
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