Quality Speaks For Itself

Financial Markets in turmoil: A time to take cover or a time to act?

Posted in Markets by Carl on October 15th, 2008 12:23pm

We’ve just come back from a week in Dubai and Abu Dhabi coinciding with Cityscape Dubai; a huge property event showcasing UAE property investment opportunities. We wanted to understand the market (especially Abu Dhabi) and investigate property investment opportunities for you, our clients. And what a week it proved to be! It was strange to be 6 hours away in Dubai with so many people walking around with their mobile stuck to their ear saying “What’s the price of RBS? What’s happening with the FTSE and the Dow?” We truly live in a global economy where information spreads rapidly, but watching these tumultuous events unfold from afar also allowed us the benefit of a different perspective.

We were unsure what the sentiment would be back in the UK but in the UAE there was definitely concern but also a feeling that this is a time of huge opportunity. You should rely on fact not sentiment. For the savvy investor who is prepared to make a long term play (12 months +) there is plenty of value in what ever asset class you choose.

We obviously talk to many people about investment and long term financial goals. Naturally people like to have a balanced approach to assets, geography and risk. How ironic then that much of the value that has been wiped from people’s portfolios has been lost from the more traditionally safe investments of holding cash and pensions. Never was the term Due Diligence been more relevant; we even have to check out the strength of a bank before we can deposit less than £50,000 safely!

We believe that it will take many years before equity markets recover sufficiently to get back to their levels of 18 months ago let alone power forward to enable us to have a decent pension in our retirements. If you keep your head this is a fantastic time to rectify the situation, but what is clear is that personal action is key rather than sitting back passively and relying on fund managers (who have repeatedly failed us) to make your situation better. One thing is for sure they will look after themselves first!

You all know that QIS believes property should be a significant proportion of one’s investment portfolio. In times of turmoil investors have historically turned to property as a safe investment. We expect the same to happen again this time. However one thing is for sure you can’t just invest in any property anywhere. Even ill-informed investors can make money in a Bull market but in a Bear market the ill-informed are more likely to lose money. Due diligence is the key, backed with a basic understanding of the demand drivers that sit behind good investment opportunities. Put simply, where supply exceeds demand value exists. This has been relevant to us as we have presented our opportunities in Larnaca, Cyprus over the last few months to many of you This is a great example of an investment opportunity that is backed by solid fundamentals and where there has been and continues to be a regular positive news flow.

The economy is global and so too are property investment opportunities. They are also dynamic and will alter over time. Most of you will be familiar with our 4 stage QIS StEP due diligence model. The first step of this (the country dynamics) is more important than ever (witness the recent events in Iceland). This is what led us to Abu Dhabi many weeks before the events of last week.

We saw enough during our trip to excite us sufficiently to spend the next few weeks deeply examining the market using our QIS StEP approach. If it still excites us at the end of this process we’ll bring the opportunities to you.

Remember we are in truly exciting times!