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Stocks Drop on Reports of
Softening Property Prices

DUBAI — Bears overpowered bulls at the UAE bourses on property concerns following a Morgan Stanley report that residential property prices in Dubai have fallen 25 per cent since peaking last September.

The Dubai Financial Market (DFM) fell 1.3 per cent to 1,454.33 points, lowest close since June 2004. The Abu Dhabi Securities Exchange or ADX lost 2.2 per cent, bringing the 4-day retreat to 5.1 per cent. Emaar Properties fell to its lowest in almost five years after Morgan Stanley said the country’s biggest real-estate company will be most hit by the decline in property prices. Sorouh Real Estate slid for a fourth day, while Aldar Properties closed at a record low. National Bank of Abu Dhabi retreated after reporting a 34 per cent drop fourth quarter profit.

Emaar dropped 5.9 per cent to Dh1.77, its lowest since May 2004. The developer will be most affected by the drop in property prices because two of its projects, Burj Dubai and Old Town, have taken the biggest hit since the peak, the report said. Negative research on the property sector, which would normally be shrugged off by locals is weighing hard as increasingly risk averse investors are keeping their powder dry, said Matthew Wakeman, Managing Director of cash and equity linked trading at EFG-Hermes. Everything is cheap right now but could get cheaper resulting in keeping buyers on the sidelines waiting for the market to turn rather than picking bottom themselves, added Wakeman.

Prices of high-end Dubai properties - including those at the Burj Dubai development that includes the world’s tallest tower, as well as the man-made Palm Jumeirah - are down 35 per cent since their peak, revealed Morgan Stanley. “Some $263 billion worth of projects in the UAE have been delayed or cancelled.”

Wakeman said, “New support levels still awaited after trading through November’s lows. In Dubai, the uncertainty caused by the lack of

large cap full year results has set the market adrift and caused volumes to dry up. We have seen results in Abu Dhabi showing that companies are strong, but certainly not outperforming.”

Air Arabia remains well supported at these levels on hopes the low cost carrier will increase its market share at the expense of regional flag carriers. The stock is unchanged on the year.

· abdulbasit@khaleejtimes.com