UAE real estate companies rebound after market turmoil

Emaar Development

• Industry giants hit on Monday closing
• But signs of recovery on Tuesday
• ‘Fundamentals remain strong’

Real estate companies bore the brunt of Monday’s stock sell-off in the GCC, although prices showed significant signs of recovery on Tuesday.

Dubai Financial Market closed on Monday down 4.5 percent, while Saudi Arabia’s Tadawul exchange was down 2.1 percent. Kuwait’s bourse was showing a negative of 2.13 percent on a day when $6.4 trillion was wiped off stocks across the world.

Real estate companies were down 7.3 percent in Dubai and down 7.1 percent in Abu Dhabi.

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The UAE giants Emaar Properties (-7.3 percent), Emaar Development (-8.45 percent) and Aldar Properties (-7.25 percent) all took a particular hit in the day’s trading.

Bhavik Mehta, deputy head of research and investment products at Century Financial, said that although stock market traders had reacted negatively, this was unlikely to affect house prices.

He attributed this to the shift towards home ownership in the UAE, combined with low property valuations, expectations of reduced borrowing costs and more affordable mortgage products.

“However, should the global investment scenario worsen and the geopolitical tensions in the Middle East elevate, the real estate markets in the region could decline further,” Mehta said.

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The Emaar companies and Aldar were all in the green at close of business on Tuesday – Emaar Properties (+2.19 percent), Emaar Development (+6.06 percent) and Aldar Properties (+6.79 percent).

On Monday a weaker than expected US jobs report for July, more subdued earnings from Big Tech’s quarterly reports and a strengthening dollar against the Japanese yen combined to send shockwaves across global markets.

“Regional equity markets have been caught up in volatility in response to heightened regional geopolitical tensions and exaggerated fears of recessions,” said Scott Livermore, chief economist at Oxford Economics Middle East.

“If any of these risks come to fruition then GCC economies will be caught up in the repercussions,” he said.

“But that is not our central view and fundamentals remain strong, especially in Saudi Arabia and the UAE.”