Alternative investments in the Middle East
Posted: 26th April 2019 09:44
Middle Eastern economies tend to be thought of first and foremost in terms of oil, but with concerns growing about the impact of the fossil fuel industry, this isn’t something that everybody feels comfortable – or secure – putting money into. If you’re among those people, then you may have overlooked the region as a result – and seriously missed out. There’s a lot going on here as governments use their oil wealth to encourage diversification, understanding the risks of having an economy that relies too heavily on one thing. This is leading to rapid development in other areas, especially as local markets open up, and there are some fantastic opportunities for foreign investors.
The past five years have seen a real boom in the finance industry right across the Middle East. This is partly as a result of companies and individuals seeking to diversify their assets and use their own oil wealth to generate other forms of income. It’s also a consequence of improved standards of living. Although the wealth gap is still a big problem in some countries, more and more ordinary people are earning enough to want to start saving and making their money work for them in other ways. People who have never used banks before are rushing to set up accounts, foreign workers (including many from the UK) are moving in to make up a shortfall in local expertise, and finance companies are getting stronger and stronger. With significant potential to expand further, this is a very attractive sector for investors.
With all the infrastructure in place to store and distribute electricity and to promote related products, Middle Eastern entrepreneurs have increasingly been looking at alternative ways that they can generate energy when the oil market goes into decline. There’s one other thing that the region has a lot of and that’s sunshine. Now, areas of desert that previously had zero productivity – and were therefore very cheap to buy – are turning to solar farms. Numerous small companies are moving into this area with big ambitions. Rapid improvements in power storage technology and increasing interest in moving to renewable electricity among governments, corporations and private citizens worldwide make this an excellent area in which to get involved.
As we’ve seen in sub-Saharan Africa and parts of Asia, as soon as incomes begin to rise, a massive demand for telecommunications follows. Access to mobile phone networks and the internet gives people educational and economic opportunities that they have never had before, as well as significantly increasing individual freedoms. The telecommunications sector is booming right across the Middle East but particularly in areas that have previously been underdeveloped. It’s ripe with opportunities for investors, and getting involved with local telecommunications projects can be a gateway into communities where innovation is about to increase spectacularly.
Another side effect of increased standards of living is that people are getting more to eat and they’re experimenting with different kinds of food, no longer limited to what’s produced in their local areas. This is creating extensive opportunities right across the food sector, from the development of new products and different marketing strategies for imports to the logistics of transport and storage in a hot climate. Al Masah Capital, which has a proven track record in this area, is one of those to benefit and has seen a significant increase in demand right across the countries where it operates. Again, this is a market with significant untapped potential and one that can only do better as a side effect of broader investment in the region.
Between the demands of industry and the increasing empowerment of individuals, the Middle East has become a growth area for technology. There’s a big market for gadgets developed elsewhere, and there are also numerous companies working on specific products designed to suit local climates and cultures. This is a sector that always has a lot of room for start-ups, so if you’re looking for smaller-scale investment opportunities, and you have enough technical and market expertise to spot a good prospect, then it’s an area that you should really be taking a look at.
With all this and more creating employment and driving economic expansion, Middle Eastern countries are reaping the rewards. Writing off this region because you’re not interested in oil investments would be a mistake. There’s a great deal to explore and some of these investment opportunities could be just what you’ve been looking for.