Credit Suisse Reaffirms Positive Outlook for UAE

The UAE real estate sector is expected to rebound quickly from its current slump, thanks to its solid fundamentals, said Credit Suisse.

By Rocel Felix

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Published: Sat 20 Dec 2008, 1:15 AM

Last updated: Wed 23 Nov 2022, 11:28 AM

Credit Suisse in its UAE property sector outlook for 2009, downgraded its target prices for most real estate stocks in the country as a result of the slowdown in economic growth and liquidity problems, but kept its positive outlook on the real estate market.

“We maintain our positive outlook for the real estate market in Abu Dhabi and our cautious outlook for Dubai.”

It said the Abu Dhabi property remains attractive owing to the current undersupply and the influx of government funds to ensure projects are not derailed.

“Given the supply and demand dynamics for residential units in 2008 in Abu Dhabi City, a very visible gap still exists. We believe this gap will keep narrowing until 2011, as supply starts to reach the market in the shape of mega projects such as Al Reem Island and Al Raha beach in 2009.”

Dubai on the other hand is clearly hit by a tighter market and shortage of liquidity that makes financing more difficult, said Credit Suisse.

A potential catalyst for the property sector is bringing the bigger players in the UAE sector under the umbrella of the federal government. This is already being done in the mortgage finance sector in the UAE.

“Bringing the sector under the supervision of the federal government, which is dominated by Abu Dhabi, would be a more positive move and would ensure the availability of liquidity in both the real estate and financial sectors.”

Another catalyst is the movement of oil prices which will have a strong effect on UAE’s liquidity, and hence, the real estate market.

Credit Suisse maintained its bullishness on major property stocks in the UAE but revised its target prices due to the current downturn besetting the sector.

Credit Suisse upgraded its rating of Abu Dhabi’s Sorouh Real Estate from “neutral” to “outperform,” while reducing the target price to Dh6 per share from Dh7.2. Aldar Properties also maintained its “outperform” rating but its target price was lowered to Dh12.0 per share from Dh14.4.

The “outperform” rating on Dubai’s Union Properties was kept, but its target price trimmed to Dh3.91 per share from Dh5. Emaar Properties, the Middle East region’s largest property developer maintained its “neutral” rating and its target price, cut to Dh4.42 per share from Dh9.25.

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