Mahmoud Elburai, Senior Advisor in the government of Dubai, Vice-President of FIABCI International Real Estate Federation for Arab countries, told LDaily why the Ukrainian real estate market and related service and production industries can be attractive for foreign investors. He also mentioned that to avoid possible risks, investors should enter the market through a reliable partner aware of the local economic and legal features.
LDaily: What are the main criteria for you to make a decision whether to choose a market for investing or not?
M. Elburai: A legal framework that protects investors’ rights is the most important thing followed by transparency in terms of information availability to make the right decisions. It’s also significant to consider high returns for a low risk.
Nowadays given high risks in most markets, investors look for stability even if it comes with lower returns. The potential of future growth is also an important factor for investors to care about when investing in markets. This implies a higher future value.
LDaily: What level of return and investment payback period do you pay attention to when you advise your clients on a particular project?
M. Elburai: 15% is an attractive rate of return investors look for when investing in international markets. A lower rate has to be justified by a lower risk. Investors normally expect 7-10 years of payback. However, we look at the projects case by case, especially at their return, risks, and growth potential.
LDaily: What markets have your clients invested in during the last 3 years? Why did you pay attention to Ukraine?
M. Elburai: Eastern Europe is an attractive destination for many Middle Eastern investors in addition to traditional developed cities like London and Paris. The advantage of these markets is their regulatory certainty that gives investors peace of mind and financial system stability. Although this comes with lower returns, risks are also lower.
Ukraine provides higher returns with its emerging economy on Western Europe’s doorstep. Nowadays very few markets provide such high returns like Ukraine does.
LDaily: What economy sectors are the most promising and trendy for investment in your country? Why do you think it would be interesting for your clients to invest in the similar projects in Ukraine?
M. Elburai: Taking into consideration that Dubai’s economy is dominated by real estate, tourism, finance and trade, real estate and services are the top sectors for investors. Investment in health care and education sectors is promising because the quality of life strengthens over time.
As the market is slowing down here, many prefer to invest in higher return countries like Ukraine. Middle East investors like income-producing assets with growth potential in the future. Infrastructure projects such as transport infrastructure, shopping malls and flagship commercial towers are also of great interest.
LDaily: What risks do you see for your clients about entering the Ukrainian market? How long should they stay in the market?
M. Elburai: Laws for foreign investors are still being developed in Ukraine. It means more should be done to understand their rights and duties.
Moreover, the information is expensive. Thus, getting to Ukraine through a trusted partner like S&P gives investors peace of mind. They need to be well aware of the laws, regulations and market information.
LDaily: What would you advise your clients after their first investment round has been successful: to continue to invest in Ukrainian projects or to look for another market? Why?
M. Elburai: Diversification is important. There are several sectors for investment in Ukraine. Therefore, investors need to create a well-diversified portfolio taking risks and returns into consideration. They can have different assets across different sectors, industries, locations.
Ukraine gives high returns compared to international markets but with slightly higher risks. So, investors need to diversify developed economies as well.
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