< Previous10 AB/ Money October – November 2021 Dubai property sales hit near-eight year high in September Mo’asher, Dubai’s offi cial sales price index, reveals that real estate deals worth over AED16bn were seen last month Dubai’s real estate market registered the highest value of sales for nearly eight years in September, according to figures compiled by Mo’asher, the emirate’s official sales price index. It said that there were 5,762 property sales transactions worth over AED16.2bn ($4.4bn) last month, the most since December 2013. The September total brings the year-to-date total value to over AED100bn, it added. Mo’asher, launched by Dubai Land Depart- ment (DLD) in cooperation with Property Finder, said the average price of apartments stood at AED954,524 while the average price of villas/ townhouses was AED 1,940,843. It added that in just nine months, the value of real estate sales transactions in Dubai is 45.2 percent more compared to 2020 as a whole and is already the highest yearly sales figure since 2017. In September, 56 percent of all sales transac- tions were for secondary/ready properties and 44 percent were for off-plan properties. The off-plan market transacted 2,530 proper- ties worth a total of AED5.1bn, the highest in over eight years. The secondary market transacted 3,232 sales deals worth AED11.1bn. The third quarter has been the best Q3 recorded in the history of Dubai’s real estate sector in terms of sales transaction value and the best Q3 for sales transaction volume since 2009 after recording 15,927 sales transactions worth AED42.35bn. When compared to Q3 2020, Q3 showed an increase of 85.4 percent in sales transaction volume and an increase of 135.4 percent in sales transaction value. Compared to pre-covid times in Q3 2019, there was an increase of 64.5 percent in volume and an increase of 138.8 percent in value. THE EXPLAINER u In just nine months, the value of real estate sales transactions in Dubai is 45.2 percent more compared to last year PROPERTY BOOM Dubai’s real estate sector is fl ourishing with the highest- ever residential secondary market transaction values recorded in the Q2 and Q3 of this year, according to research by CORE. OPENING BELL / THE EXPLAINERarabianbusiness.com 11 / EXPERT ADVICE F irstly, have you done your research, and have you got your reasons for buying an asset which you may not be receiving a professional advice on? I’d strongly advise against anyone buying and invest- ing in any asset class if they don’t fully understand the risks that are attached to it. If you feel comfortable that this is something you want to hold then I would start doing your own research on what currencies are available and what level of volatility are asso- ciates with them. Often the smaller value crypto coins such as Bonfire will be incredibly volatile and risk investors’ money going to zero. Of course, the benefit is that these coins could also “go to the moon” and provide returns that are astro- nomical. With something like this I would always say treat it as if you have already lost it. There is no harm in investing a tiny proportion of your assets into things like this if you are prepared to be left with nothing. If we were to look at some of the more popular coins like BTC, ETH, ADA or USDT then it’s a different way of thinking about things. Most people would expect some degree of stabil- ity while knowing overall the market is very volatile. The issue that most professionals will have with cryptocurrency is that many people have raised concerns that it is a bubble. It’s also a common worry for investors that these coins have exceeded its real value. That’s not saying these coins can’t increase in value as the biggest driver behind the price is demand and let’s be honest, crypto has an incredible amount of media coverage and a “fashionable” appeal to it. My concern around holding crypto is that we don’t know when the proverbial bubble will burst, I’m thinking of buying cryptocurrency as part of my investment strategy – What percentage of my overall portfolio should be in crypto? Arabian Bussiness reader, Bahrain and thus making it a holding which buys and sells must be timed impeccably. Earlier in the year when the market retracted significantly (40 percent – 50 percent in some cases) then this would have signaled a time where your exposure could have been higher. If you wanted to buy crypto that was a great entry point. We have since rebounded and are looking at potential rise on BTC and USDT within the next few weeks. As somebody giving advice, I would be asking a client to consider reducing the amount they are holding. Like with any financial advice there is no hard and fast rule. No magic number or unicorn stock that will change your portfolio and make you rich. A good financial advisor will simply help you do the maths on what’s the safest and most comfortable amount you can invest without feeling it’s an issue or potentially damaging to your future planning if it was to go wrong. If I had a client who was well on track to meet the goals they have set and they wanted to take 10 – 15 percent and put it into cryptocurrency, then I would have no objections if they understand the risks and it’s not a regulated investment. If I was working with a client at the start of the journey and they had an uphill task to reach a goal we set, then I would be insisting that cryptocurrency was the last investment they make. Lewis Delaney is a wealth manager and specialist in tax and expat fi nance at Wentworth CM (In partnership with GSB Capital). If you have any investment or fi nance questions for Lewis, please email: editor@arabianbusiness.com Cryptocurrency investing: The pros and cons Lewis Delaney, CEO and founder of Wentworth CM, answers the fi nancial questions from our readers $4,099 The value of 1 Ethereum as of 24 October 2021 Q NO MAGIC NUMBER OR UNICORN STOCK THAT WILL CHANGE YOUR PORTFOLIO AND MAKE YOU RICH” Q I’D STRONGLY ADVISE AGAINST ANYONE BUYING AND INVESTING IN ANY ASSET CLASS IF THEY DON’T FULLY UNDERSTAND THE RISKS” EXPER T ADVICE / EXPERT ADVICE12 AB/ Money October – November 2021 C OMMENT / By Ziad Melhem, chief business development officer, Amana Capitaly Social media has transformed business landscapes, opening new possibilities for all, including in online trading. Now an integral digital marketing aspect, user numbers continue growing in an industry valued at approximately $100bn, with traders having new ways to connect with clients and alert them to opportunities. However, social media has had something of a double-edged impact, with advantage and disruption creating The good, the bad and the ugly Social media is yielding many positive online trading outcomes, and traders having greater access to trade and investment tools is incredible – but only if they have the necessary knowledge u Information Young traders and investors use social media as virtual trading clubs to exchange ideas, promote stocks and gain financial advicearabianbusiness.com 13 C OMMENT Q TRADERS BECOME HOOKED ON QUICK GAINS AND ARE ULTIMATELY POSITIONED ON THE WRONG SIDE OF THE TRADE” affected. As such, meme stocks perhaps rank as the most negative of social media’s online trading impacts, although there are other unprepossessing aspects to consider. Understanding the ugly While Twitter, TikTok, and other platforms create self-directed online traders, they also encourage biased, ill-informed trading decisions. For instance, TikTok has accumulated a bad reputation for videos promoting volatile crypto investments and limiting educational content impacts. Another example implicates Twitter, YouTube, and Instagram giving rise to finance ‘experts ’or ‘finfluencers.’ These would-be experts promise fortunes to Gen Z and other credulous traders daily – an insidious trading community disease that must be eradicated. Anyone can brand themselves a finfluencer; likely to be unregulated, with unmonitored content and social media algorithms pushing their posts onto inexperienced investors regardless. Therefore, platforms could be forced to flag opinions and stock tips from ‘unverified’ influencers in due course. A concrete plan for regulating finfluencers has not been established to date, yet preventative action is essential nonetheless. content on mobile versus 2.5 seconds on desktop, and incredible social media speeds can cause powerful moves in the markets. To understand this scenario better, there are meme stocks phases. Firstly, there’s the early adopter phase. Investors believe stocks to be undervalued and begin purchasing, with the stock price increasing slowly. Secondly, traders pay attention to volume increases, leading to investments snowballing. Thirdly, the ‘FOMO’ stage transpires. More investors generate fear of missing out when stock prices are high. And finally comes the profit-taking phase, where early adopters begin cashing out and the selling phase spirals out of control as traders fear losing money – with prices ultimately going down. Traders become hooked on quick gains and are ultimately positioned on the wrong side of the trade, with brokerage firms and small and large traders alike a modern-day ‘the good, the bad, and the ugly’ scenario. Therefore, a question arises: What is the true impact of social media on online trading? Evaluating the good First and foremost, the retail trading environment has witnessed a healthy growth trajectory, and the masses are shaping economic growth through financial markets participation. Retail traders are making out 20 percent of the daily market volume, representing a 100 percent jump in the number of retail traders compared to 2019. A new form of financial literacy has also emerged, with trading now for everyone rather than the privileged few. Anyone online can harness the wisdom of crowds, leading to increased success for all parties. Thanks to social media interconnectivity, inexperienced traders observe how others make trades and learn. Traders can access information in milliseconds, platforms are creating new self-sufficient and self-driven online traders, and posts are building an enormous arsenal of financial data. Furthermore, young traders and investors use Twitter, YouTube, Instagram, TikTok, and other platforms as virtual trading clubs to exchange ideas, promote stocks, and gain financial advice. Therefore, social media has forged a feeling of community among retail traders becoming more and more financially educated. Considering the bad As with any industry, negatives accompany positives. Online traders are all too familiar with meme stocks, those that skyrocket thanks to social media “hype” and sudden, violent movements. Small traders trigger meme stocks and cause a short squeeze on stocks themselves. And short squeeze is a phenomenon where short-sellers rush to hedge their positions or buy stock in the event of an advance price moment to cover their losses. Crucially, it takes only 1.7 seconds to consume, for instance, Facebook 26.4% The gains recorded by the Saudi Tadawul for the fi rst half of 2021, second highest in the GCC after Abu Dhabi u Platforms abound Social media is giving rise to finance experts, or ‘finfluencers’14 AB/Money October – November 2021 C OMMENT / By Dina Sam’an, founder and managing director of CoinMENA Money laundering and illicit funds have become more prevalent in the world’s financial markets, catching the atten- tion of various regulators and the public. As a result, the global financial services landscape has been undergo- ing increased regulatory and structural reforms with regards to more compre- hensive legislation, alongside anti- Crypto regulation for increased legitimacy Regulation protects the legitimate interests of stakeholders, underpins markets and ensures the delivery of goods and services. Crypto regulation is no different u Alternative investing The growth of the digital asset and blockchain industries is a long-term endeavourarabianbusiness.com 15 C OMMENT Q IT IS IMPERATIVE TO REALISE THAT BLOCKCHAIN CAN BE COMPATIBLE, AND THEREFORE BECOME AN INTEGRAL PART OF THE EXISTING FINANCIAL SYSTEM AND REGULATORY FRAMEWORKS” investors and transactions. This is supplemented by a comprehensive governance framework that ensures the existence of clear operational and investor-related policies, complete segregation of company and investor funds, adequate custodial arrange- ments, and recourse rights. Further- more, operations are supported by a robust cybersecurity infrastructure. At present, both Bahrain and the UAE are examining crypto-assets extensively from a regulatory standpoint. This opens the door to the industry, not only for retail investors to partake, but also for institutions to both serve and invest in it. As more regional regulators embrace crypto assets, we will see increased investment into the space, as well as crypto being accepted as an offi- cial form of payment. The growth of the digital asset and blockchain industries, along with the accompanying laws, is a long-term endeavour. Finding the right balance of regulation and innovation, rather than taking a heavy-handed approach, is critical to ensuring that the industry thrives, becomes mainstream, provides adequate investor protection and confidence and eventually becomes a well-established and sought-after investment asset class. money laundering (AML) and know your customer (KYC) processes. In parallel, over the past decade, we have witnessed the emergence of blockchain and digital assets, which are transforming societies and countries as a whole. With such a paradigm shift, it is imperative to realise that blockchain can be compatible, and therefore become an integral part of the existing financial system and regulatory frame- works, as opposed to representing an existential threat. As with any new and developing industry, there have been cases of hack- ing, fraud and money laundering, which have resulted in increased scrutiny and calls for stricter regulations and gover- nance mechanisms. This has also led to global regulatory bodies working on understanding how the technology works and should be regulated, overall creating a net positive impact for the future of crypto and its stakeholders. Due to the varying interpretations of the regulations surrounding blockchain and digital assets, the industry is often regulated differently in different coun- tries, albeit with common themes pertaining to centralised platforms. At the heart of such regulations is a strict KYC and AML process that under- pins all operations and identifies all $2.47bn The estimated market capitalisation of cryptocurrencies as of October 13, according to Statista u Financial hub The UAE is examining crypto-assets extensively from a regulatory standpoint16 AB/Money October – November 2021 C OMMENT / By Daniel Fleming, Head of Wealth Advisory for the MENA region of the J.P. Morgan Private Banky carefully. They don’t necessarily address the biggest threat to a successful wealth transfer (even above investment and economic concerns): family dynamics. As with all family businesses, GCC families experience several issues: from selecting a competent successor 90% The proportion of family-owned businesses in the UAE’s private sector entities, according to the Atlantic Council Preparing young adults for wealth For family businesses to future-proof themselves, they must consider all the facets of succession planning, the modalities for passing on leadership roles and ownership across generations, family members, and employees u Vital contributor Family businesses represent 80-90 percent of commerce in the GCC History repeats itself. High net worth families assume that a trust, family business, or foundation will naturally create the structures and opportunities for the next generation to emerge as mature leaders. But entities alone don’t prepare heirs for handling wealth arabianbusiness.com 17 C OMMENT Q ONLY 25 PERCENT OF FAMILY BUSINESSES HAVE AN EFFECTIVE WEALTH TRANSFER STRATEGY AND A LEGALLY APPROPRIATE SUCCESSION PLAN IN PLACE” Q PRIORITISING THE FAMILY VALUES BUILDS A FOUNDATION FOR THE NEXT-GENERATION’S DECISION MAKING, WHETHER PARENTS AND GRANDPARENTS ARE AROUND OR NOT” Perhaps it’s a belief in developing an entrepreneurial spirit, or an intention to make better one’s community via charitable giving. Communicating these values to children helps them understand the purpose of the family’s wealth and to plan accordingly. • To identify a set of wealth education milestones, we suggest looking at: • How to nurture your children’s indi- vidual passions, interest and purpose • Developing their financial awareness and competence through attending meetings and/or learning programmes with your advisers; for example, we host learning programmes on a range of topics from understanding and investing in the public markets to how to invest in more entrepreneurial ventures • Developing their knowledge on philanthropy • Cultivating their ability to work together as siblings/cousins Consistent communication can align families and enable all members to reach their desired outcomes. Responding to the next generation’s wish for transparency and participat- ing in regular, open dialogue are criti- cal components of family cohesive- ness and success. sionally, intellectually, and emotion- ally. In addition to providing financial education sessions and timely infor- mation, creating long-term aspirations can guide adult children on their holis- tic journey to wealth literacy. An affirmation of values, expressed as a family motto or mission state- ment, can help articulate how the family intends to use its resources. Prioritising the family values builds a foundation for the next-generation’s decision making, whether parents and grandparents are around or not. to possible friction that may hamper a successful transition. For family busi- nesses to future-proof themselves, they must consider all the facets of succession planning, the modalities for passing on leadership roles and ownership across generations, family members, and employees. Family businesses represent 80-90 percent of commerce in the GCC. They contribute 50-60 percent of the national gross domestic product and employ up to 70 percent of the region’s labour force. Yet only 25 percent of family businesses have an effective wealth transfer strategy and a legally appropriate succession plan in place. How might families achieve a more successful and strategic wealth transfer across generations? Parents can build a runway for chil- dren with a few simple steps, enhanc- ing the likelihood that descendants will sustain the family’s wealth. Understanding “money silence” Time to learn and digest is one reason for discussing family resources earlier rather than later. Another reason is to allow children to plan for vocations of their choosing and pursue their passions. (We’ve heard from clients who didn’t because they hadn’t been told about their inheritance.) Yet money silence is common and understandable. Among the many reasons for this is the fear it could disincentivise children and young adults. Yet imagine a medical emer- gency incapacitating a family deci- sion-maker, thrusting the next gener- ation into ‘power’ unexpectedly and unprepared to lead. How would the family’s entities fare with a young adult making the investment deci- sions, or hiring advisors under duress – after never learned how to make them wisely? It’s not just about preparing wealth for a family but preparing a family for its wealth. The ages from 20 to 35 are often when young people emerge profes- 89% The percentage of the region’s family businesses who expect to see growth in 2022, according to the Middle East Family Business Survey 2021 u Next generation The ages from 20 to 35 are often when young people emerge profession- ally, intellectually, and emotionally18 AB/Money October – November 2021 While more than two-thirds of young Arabs are concerned about personal debt, the majority believe their ‘best days are ahead of them’, increasingly seeking entrepreneurship opportunities, ASDA’A-BCW’s 13th Arab Youth Survey reveals BY NABILA RAHAL ARAB YOUTH CONCERNED ABOUT DEBT BUT OPTIMISTIC 18 AB/Money October – November 2021 SPE CIAL / ARAB YOUTH SURVEY/ ARAB YOUTH / ARAB YOUTH SURVEY arabianbusiness.com 19Next >