Government bonds are often considered a safe investment. The Slovak Republic and other eurozone countries offer them as a stable investment vehicle that has low risk but also low returns. On the other hand, investment properties – especially in dynamically growing locations such as Dubai – can offer not only higher annual returns, but also growth in the value of the investmentHow do these two options differ and which is the better option for a long-term investment?
Government Bonds: Low Risk, but also Low Return
Government bonds work on a simple principle – an investor lends money to the state for a certain period and receives a fixed interest rate. In recent years, Slovakia has been issuing bonds with different maturities, with their yield being approximately 3 % per annum..
The problem? Inflation is cutting from your investment.
With current inflation in the eurozone, which was around 4% in January 2024 (source: Eurostat), a 3% yield on bonds means a real loss in value.If your investments are not earning more than inflation, their purchasing power is decreasing.
Example:
- Invest 10 000 € into a government bond with a yield 3 % per annum.
- After a year you have 10 300 €, but if inflation was 4%, the real value of your investment is only 9 904 €
- Your loss on purchasing power is -96 €
If government bonds don't yield more than inflation, it means you are actually losing money.
Investing in apartments in Dubai: 8-10% return + property value growth
Dubai is one of the fastest growing real estate destinations in the world. In recent years, it has seen property prices increase by 10-15%year-on-year, while stable rental demand brings investors a passive income of 8-10% per year.
Double the benefit:
- Rental yield - the average return on investment properties in Dubai is 8-10% per year.
- Property value growth - according to data from the Dubai Land Department, apartment prices have increased by 10-15% per year in recent years.
How does it look like in practice?
If you invest in a €200,000 apartment in Dubai, you can expect:
✅ Annual rental income: €16,000 - €20,000
✅ Expected property value growth: €20,000 - €30,000 per year
The total return can be €30,000 - €50,000 per year, which is many times more than with bonds, which is násobne viac než pri dlhopisoch.
Comparison: Government Bonds vs. Investment Apartment in Dubai (with the same investment of €200,000)
| Investment | Annual return | Total return in 4 yrs | Growth in investment value | Total expected return in 4 yrs |
| Patriot government bonds (3.3% p.a.) | €6 600 | €26 400 | 0 % | €26 400 |
| Investment apartment in Dubai (8 – 10% p.a. of rent) | 16 000 – 20 000 € | 64 000 – 80 000 € | 20 000 – 30 000 € annually (~10 – 15 % p.a.) | in 4 years |
Result: Which investment is better?
- Government bonds guarantee a stable return of 3.3% per year, but in total in 4 years the investor will earn only €26,400 iba 26 400 €.
- Investing in real estate in Dubai brings a return of 8-10% from rental + an increase in the value of the property by 10-15% per year, which allows the investor to earn in 4 years, which is many times more..
This calculation clearly shows that investment properties in Dubai outperform government bonds not only in terms of rental income, but also due to the increasing value of the property.
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How to buy an investment apartment in Dubai?
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Conclusion: Which investment is better?
If you are comfortable with low risk and a guaranteed returngovernment bonds may be a viable option. However, if you are looking for higher returns and protection against inflation,investing in real estate – especially in fast-growing locations like Dubai – offers significantly better terms.
While bonds often fail to keep pace with inflation, real estate can provide both steady passive income and growth in the value of your investment. If you are looking for a safe and profitable way to grow your capital, Dubai is an ideal choice for investors..
Warning on the risks of investing
Investing in any financial instrument, including government bonds and real estate, involves risk. The value of an investment and its returns may change over time and there is no guarantee that an investor will achieve the expected returns. Past performance is not a guarantee of future performance.
This article is for informational purposes only and does not constitute investment advice or a recommendation to buy or sell any specific investment product. You should consult a financial professional before making any investment and consider your own financial situation, investment objectives and risk profile.
👉 If you are interested in more detailed information about investing in real estate in Dubai, please contact Ing. Ivanu Ladickú on phone number: +421 905 345 057