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FALLING DUBAI PROPERTY SHARES BLAMED ON INVESTOR PULLOUT

Friday, 12 Sep 2008

On Wednesday, the top Dubai property shares fell to even lower levels, and analysts are unable to predict how much lower shares could ultimately to drop. Corruption investigations, increasingly tight regulations that are intended to curb speculation buying, and rumours of a prospective overabundance of Dubai property coming onto the market have caused investors to flee the emirate’s property sector in the last few weeks.

Emaar Properties’ shares fell 3% and closed at 7.85 dirhams on Wednesday, lower than they have been for 41 months, which makes it the hardest-hit stock in the market.

Rami Sidani, head of MENA investment at Schroders Investment Management, said, "We are definitely going through tough times. It's a combination of bad news coming at the same time with investigations, concerns over the real estate market and extra supply coming to the market. It's hard to assess the market going forward. We need more insight into the real estate sector, either from the government or from the large developers."

Tamweel, a mortgage company that finances property in Dubai, attempted to instil some confidence in its investors on Wednesday by issuing a statement in which it claimed that the Dubai police’s arrest of its deputy chief executive would not adversely affect its functioning or performance in the financial markets.

An increasingly negative attitude towards UAE property markets makes it more difficult to predict how low stocks will fall in the end. The main Dubai index has declined over 25% in 2008, after rising more than 43% last year. Shares of property in Dubai are now so low that a few experts have called them ‘a bargain’, and according to Bikash Rout, Global Investment House’ senior financial analyst, now would be a good time to invest in accommodation in Dubai, which now relies upon opinion instead of valuations.