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GCC property firms face 20% drop in 2009 earnings

The earnings of GCC real estate companies could shrink by 20 percent in 2009, Kuwaiti investment bank Markaz said on Thursday, as the squeeze continues from the global crisis.

The overall market value of property firms in the Gulf contracted 44 percent in the first quarter of 2009 year-on-year, with earnings also down 42 percent in 2008 compared to the year before, the bank said in a research note.
Dubai real estate firms were the biggest losers in the first quarter of 2009, shrinking 80 percent compared to the same period in 2008, with the value of companies in Abu Dhabi suffering a 72 percent fall.

While earnings for Abu Dhabi and Qatar companies were down 49 percent in the first three months of 2009, liquidity is improving , the report said, adding that ‘financing woes’ were ‘slowly disappearing’.

“..the report suggests a faster recovery for these companies because of better sector fundamentals. Market value has recovered in Q1-09 compared to Q4-08 and Qatar leads the recovery followed by Abu Dhabi and Kuwait,” the report said.

However, the Kuwaiti real estate sector was the only one in the GCC to post a loss in 2008, the report calculated.

Property companies in Kuwait posted a loss of $842m in the final quarter of 2008, faring worse than Dubai where losses stood at $671m in the same period.

The report put this down to Kuwait’s property sector which is made up of mainly investment companies that have been exposed to real estate price falls in the GCC.

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