Property prices and rents in the United Arab Emirates may
drop a further 20 percent this year and next because of excess supply, Arqaam
Capital said.
“There is a further leg down to the UAE property market
before residential prices and rents recover,” analyst Mohammad Kamal wrote in a
report dated yesterday. “We see a further 15 percent to 20 percent in downside
to prices and rents in financial year 2011 and 2012.”
Dubai’s property market had one of the world’s biggest
reversals following the global credit crisis three years ago, with home prices
slumping 64 percent since they peaked in mid- 2008, Deutsche Bank estimates.
Abu Dhabi will continue to have excess of most types of properties, leading to
a further decline in rental and sale prices, Jones Lang LaSalle said in a
research report on Oct 16.
“Genuine revival triggers will only appear in a broad
macroeconomic recovery, via job creation, a rise in discretionary spending,
continued regulatory evolution, resumed mortgage lending, and growth in tourist
flows,” Kamal said.
Arqaam started coverage of Emaar Properties, the developer
of the world’s biggest tower in Dubai, with a “buy” recommendation and a price
estimate of AED4.
Aldar Properties, Abu Dhabi’s biggest developer, was
initiated with “sell” and an estimate of AED1, while Sorouh Real Estate was
started with “hold” and an estimate of AED1.10.
“Emaar Properties has been unduly penalized, due to
skepticism over the viability of international operations, and lingering doubts
over the ability of the business to scale up hotel and retail recurring
revenues to drive growth and cash flow generation,” according to the report.
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