Evaluating the Factors Affecting Real Estate Investment Decisions in the United Arab Emirates
DOI:
https://doi.org/10.70301/Keywords:
Real Estate, Behavioral Finance, Investment Decisions, UAE, Heuristics, Risk PerceptionAbstract
Analyzing the influence of socioeconomic factors and behavioral components on investment decisions, particularly on the estimation of cognitive biases and heuristics, remains undervalued. This is especially the case given the potential offered by the UAE real estate market to diversify the UAE's economy, along with its lucrative profitability. One of the most advanced markets in the UAE is Dubai, which offers facilities for overseas investments. The value of real estate in the region is considered a basis for global real estate investments. Probing the investment behavioral peculiarities in the international real estate markets, Dubai offers a unique case study of behavioral real estate. Within the UAE, as well as globally, the behavioral components and patterns of investments in the UAE's real estate market exhibit a combination of rational and psychological biases driven by government investment policies, the influence of overseas investments, and the thought patterns of investors involved. Supplementing the behavioral real estate discourse, the study provides a detailed examination of investment patterns in the property markets of emerging markets, specifically in the UAE, through an overarching behavioral finance lens. This study highlights that behavioral biases such as loss aversion, overconfidence, and herding significantly influence investment decisions in the UAE real estate market, often leading to suboptimal outcomes. Investors can benefit from setting clear goals, conducting thorough analyses, and enhancing their financial literacy to mitigate these biases. The findings provide practical insights for investors, managers, and policymakers, bridging gaps in the literature and enhancing real estate investment practices.
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