Safety in numbers

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Financial products are facing uncertain times ahead and investors are finding that traditional forms of finance are also drying up. In order to inspire confidence and to spread the risk many investors are opting for investment funds.

Property prices have risen and fallen in equally dramatic measure over the past six months in the UAE, leaving both foreign and local buyers out in the cold. One alternative is to place money into a real estate investment fund, one such example being the UAE real estate fund operated by Eventus Capital Limited.

"Obviously, with $30m, $40m or $50m at [our] disposal, we have considerable buyer power, over and above an individual, who may have a couple of million dirhams," says Eventus Capital director, Phil Wombwell.

With a far-from-imminent end to the global financial crisis, Wombwell believes these investment funds are gaining influence in the market. "Some of the banks just aren't offering mortgages at the moment and, as such, the buying power of the fund is quite powerful," he explains.

Collective investment schemes have a host of benefits stretching beyond the confines of just taking advantage of the current market. As part of an investment fund, Wombwell claims an individual would have far more security than if they were to go solo.

"Additionally, another positive, is we have analysts in-house and we have external analysts. The due diligence on any particular deal, large or small, is done by Colliers International, and we also receive analysis from Asteco," he explains. Even the smaller things an investor might encounter are removed from the equation.

"Obvious benefits are that an individual going into an individual purchase on their own might have agency fees, commission fees, transfer fees, land registration stuff in his country, if they're overseas they might have to travel for the transfers and all the rest of it."

Ahmet Kayhan, CEO of REIDIN.com - a website which provides a wealth of information on the real estate industry in emerging markets - believes investment funds are a sound alternative to going solo.

"Even during hard times, like the ongoing economic crisis, it's always a smart move when you decide on investing money into a fund. The benefits introduce you to a professional and structured way of investment that allows for diversification, limited risk exposure, liquidity and access to better deals," he says.

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