Will these be the next Top 3 investment trends in the UAE?

Analysts have become so enraptured by memes that it becomes worthwhile to add a few to the mix in the hope of seeing whether they stick.

How about: ‘20 is the new 2’.

This one refers to the prices of the first villa launches on Palm Jumeriah in 2002, and compares it to those at Palm Jebel Ali some 21 years later. There is a lifetime of events that have transpired in the ensuing period (most notably the era of zero interest rates and the ensuing asset boom).

But even when the Palm Jebel Ali was first launched in 2005, the slogan was that it would surpass Palm Jumeirah. Now that the launches have begun, it remains to be seen whether exogenous factors - rising interest rates - dampen the party over the next few years. Or alternatively, do little to stop the bullet train that has been the white hot market in Dubai.

The Palm Jebel Ali, being more than twice the size of the Palm Jumeirah, will mature over the next two decades and, regardless of the price cycle, become another go-to destination for the world, sparking renovation and refurbishment projects in other parts of the city along the way.

Real estate assets on the waterfront will re-price themselves using the new Palm as an anchor, as was done with the Palm Jumeirah.

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Investors will argue about whether this is the beginning of the new gold rush or the start of a more subdued period of real estate activity. Either way, it encapsulates how far prices have come in 2 decades for offplan villa launches.

‘5 is the new 0’

This would reflect the new interest rates that depositors would get for their savings after more than a decade of earning nothing on their cash. This phenomenon, more than anything else, sparked the global asset rally.

With interest rates likely expected to remain high, this is rewriting the rule books of how to allocate capital for the next few years. Everything from stocks to dividend yields to rents and consumer prices are being adjusted higher as investors have a more discerning playing field to allocate their hard earned savings.

As investors go back to first principles, investments like NFTs have already felt the bone-crushing effects of interest rate gravity being exerted.

More - crypto, meme stocks? - will succumb as inflation and real rates of return come to the center of the radar screen for the small investor. It is safe to conclude that movies like ‘Dumb Money’ lampooning the David and Goliath stories of the small investor will be replaced by new templates of ‘What were we thinking?’.

‘Pay as you go’

The phenomena of defined benefits in pension schemes in the UAE will be replaced by a more efficient ring-fencing of employee assets. And with employees having a greater say, this is expected to unleash liquidity in a more systematic and sustainable manner across asset classes, particularly domestic ones.

Investors can have a greater say over what risk appetites they can tolerate in their portfolios. The decentralization of finance (long since accepted in other parts of the world) will allow for a reallocation of capital, deepening domestic capital markets. The latter by increasing IPO activity, especially in the private sector.

And allow for greater institutional activity as levels of savings force increased shareholder activism and transparency. While reducing price volatility as employee security becomes more stable, and reduce the burden on companies - as well as the courts - regarding end-of-service payments.

Each of the above themes will be endlessly scrutinized, with narratives shape shifting based on the latest news headlines that capture the imagination of the media and the zeitgeist. They will also be competing with the ‘new, new thing’ as the cacophony of differing opinions dominate the airwaves. Welcome to the new era of investing. Let the guessing - and second-guessing - begin.