By Sean Cronin and Reuters
UPDATE 2: UAE firms see major slump while Saudi market also tanks 10%.
Gulf real estate shares suffered further declines on Monday as the annual Cityscape exhibition in Dubai failed to cheer investors.
Emaar Properties slumped 10.7 percent lower to 6.07 dirhams as Dubai's real estate sector was among the hardest hit on a day of sharp losses across Gulf Arab markets.
In Abu Dhabi, real estate shares also declined sharply, along with banking stocks. Aldar Properties (6.56 dirhams) and Sorouh Real Estate both ended 9.9 percent lower, while National Bank of Abu Dhabi and First Gulf Bank both ended 10 percent down.
On average, shares in the major players slumped by more than nine percent. Global real estate markets have been hurt by a liquidity crunch and concerns that an economic slowdown will reduce spending in the region. Property companies are heavily reliant on debt to finance new projects.
Shares in Arabtec and Union Properties ended 14.95 percent and 11.47 percent lower respectively, while Tamweel finished 10.51 percent down as the Dubai benchmark ended 7.61 percent lower at 3,551 points.
The main index in Abu Dhabi closed down 5.61 percent at 3,558 points.
Meanwhile, the Saudi stock market, the largest in the Arab world, shed almost 10 percent on Monday after a week-long holiday.
The benchmark ended 9.81 percent lower at 6,726 points, tracking sharp losses with Saudi Basic Industries Corp, and Saudi Fertiliser both finishing 9.9 percent lower. Al Rajhi Bank, Samba Financial Group and Riyad Bank closed 9.8 percent, 9.7 percent and 9.9 percent lower respectively.
It was the first day of trading in Saudi Arabia following the Eid al-Fitr holiday marking the end of the Muslim holy fasting month of Ramadan.
Kuwait's main index ended 3.45 percent lower at 11,951 points, tracking sharp falls in markets across the Gulf Arab region as the global financial turmoil continues to worry investors.
Shares in Mobile Telecommunications Co (Zain) closed 7.35 percent down, while Gulf Bank and National Bank of Kuwait ended 6.78 percent and 3.49 percent lower respectively.
Qatar's main index closed 4.49 percent lower at 8,275 points, as a foreign sell-off is exacerbated by worries over the health of the global economy.
Shares in Qatar National Bank and Industries Qatar both ended more than 6 percent lower, while Qatar Gas and Transport closes more than 3 percent down.
In Bahrain, the index closed 1.53 percent down at 2,416 points, led lower by banking stocks.
Gulf Finance House and Ithmaar Bank ended 10 percent and 9 percent lower respectively.
Oman's main index closed 6.7 percent down at 7,702 points, led by lower by banking stocks.
Bank Muscat and National Bank of Oman ended 8.72 percent and 9.9 percent lower respectively.
The Saudi benchmark plummeted nearly 10 percent in early trading, with banking stocks and petrochemicals the hardest hit.
Al Rajhi Bank, Samba Financial Group and Banque Saudi Fransi plunged 9.4 percent, 9.6 percent and 9.7 percent respectively.
Markets are losing potential and pretty fast.. Property is going through a median boom, which is showing starting signs of receding although feeble ones but it would have rising effects in sometime. Let's see where it settles, but markets do fall, principle of business. One comes in, other packs up. What need to be seen, is who are the fools to rush in.
Perhaps one of the reasons people are uninspired by Cityscape is that they are mentally drained by the sheer effort of getting in and out of the venue. Once again, the DWTC exhibition halls show themselves to be unsuitable for holding such a major event - traffic jams for miles around, insufficient parking, many entrances closed (presumably because not enough metal detectors have been procured) and good luck to anyone that needs to catch a taxi to get home. And when you do get inside, time and time again you find yourself asking, why has this exhibitor turned up? What do they hope to get for all the money they have paid? In a number of cases it looks as if the developer's marketing department have insisted they have to put on a display at Cityscape, simply in order to justify their budget and headcount.
Despite cityscape, new project launches (by Nakheel as well as UP), still the market is reeling. Especially in real estate stock and banks (probably more on the ones that are overly exposed to RE market). I feel something is going on, better for individual investors to be careful!!!
People are uninspired because they see what the planners of the mega-projects do not; that the UAE real estate market cannot exist in a vacuum vis a vis the rest of the world. Local banks have lent towards one trillion dollars to the RE sector and rely on external funding for a portion of this. The liquidity crunch is therefore biting as much here as elsewhere.
The real problem with Cityscape is the insistence on staffing the stands with people who have clearly been hired for their beauty rather than their brains. If I want to invest in a project, I'd like to speak to someone whose IQ isn't inversely proportional to the height of their skirt. It would seem the people on the stands only have one brain cell between them and it always seems that whoever I've talked to isn't the one in possession of it at the time. Seriously, if I'm going to invest in your project, I want to know what it is actually is and what it does.
Is it any surprise that the exhibit failed to "inspire"? This casino has been going on for too long. Every guy and his grandmother with some money (or land) want to be developers. Is this what development and advancement is all about? Just build, build, build? The markets are reflecting the sentiment of investors (i.e. speculators), yet the spinning machine lives on, trying to convince us that all is well and that "demand" is strong. Bogus, I say.
Sounds strange...â€¦â€¦however every person hears what he wants to. The facts point to only one direction that the market is unsafe for investors (read speculators). In case you want to buy a house for your own use a little bit of patience could save you money. The inter bank borrowing rate has gone up â€“ which means interest rates on loans have gone up or are going up (read the fine print in the agreement). This would mean that there would be reduction in demand â€“ leading to cooling off / reduction in prices. However, the real estate band wagon is going out of their way (they sound desperate) to continue with the hype â€œeverything is hunky-doryâ€ when the downward spiral has begun. The bandwagon extends to media, financial institutions, celebrities, developers, real estate agents etc. â€“ who have vested interest in the system. This is understandable as they have to now fight to keep the money trickling in. Also lot of jobs are at stake in the â€œbandwagon industryâ€ â€“ guys donâ€™t get hurt.