The Family Office Founder Discusses with Argaam the Importance of Real Estate Within an Investment Portfolio and the Impact of the Covid Pandemic on this Market

In an interview with Argaam about the impact of the Covid pandemic on the real estate market, Abdulmohsin Al Omran, founder and CEO of The Family Office, said that real estate is a safe haven for any investor. Answering a question about the effect of the pandemic on the real estate market, he said that every type of real estate (residential, commercial, and industrial) was impacted differently. Some types like logistical warehouses benefited from the pandemic when home delivery companies such as Amazon needed larger warehouses to meet the increasing demand for online shopping. Other types of real estate, namely offices, were negatively impacted when employers resorted to smaller offices due to remote work.

Compared to the 2008 financial crisis, real estate valuations weren’t as affected during the pandemic, which prompted The Family Office to abstain from investing in real estate during the pandemic to protect its clients’ money.

When asked about a potential rebound in the real estate market, Abdulmohsin stated that the quantitative easing and declining interest rates to almost zero allowed the real estate market to avoid the recurrence of the 2008 financial crisis. Although liquidity encourages many investors to borrow from banks to purchase properties, The Family Office does not concern itself with current interest rates and the cost of borrowing within its investments but with the cost for its portfolio buyers in five years instead. “If you invest today and borrow from banks to purchase properties, you will lose your entire capital should an economic slowdown and high interest rates arise in five years,” he said.

As for the impact of the smart city concept on the real estate market, Abdulmohsin stated that real estate developers will design buildings according to the new needs of this industry. He gave an example about the difference between the specifications of buildings in the 1970s and 1980s and current specifications that might also change in the future with the progress of technology and internet, and therefore affect the type and specifications of property.

Discussing real estate in investment portfolios, he noted that all investors prefer real estate although it is not always the solution. Real estate is an important part of the investment portfolio but should not exceed 50% of it.

Watch the interview with Abdulmohsin Al Omran on Argaam to learn more about the importance of real estate investments and trends amid the Covid pandemic. For further insight into long-term investments watch Argaam’s previous interview with Abdulmohsin Al Omran on investment success factors.

Disclaimer:

The Family Office Co. BSC (c) is a Category 1 Investment Firm regulated by the Central Bank of Bahrain C.R. No. 53871 dated 21/6/2004. Paid Up Capital: US$10,000,000. The Family Office Co. BSC (c) only offers products and services to ‘accredited investors’ as defined by the Central Bank of Bahrain.

The Family Office International Investment is a joint stock closed company owned by one person. Paid-up capital SR20 million. CR No. 7007701696. Licensed by the Capital Market Authority (no. 17-182-30) to carry out arranging, advisory and managing investments and operating funds, with respect to securities.