Investment recommendation
Sharp downturn in the sector leads to doubts over the fate of the off-plan model
Previously appearing impervious to the troubles faced by the global real estate market,
the UAE real estate sector has been profoundly impacted by the prevailing credit crisis,
with the off-plan market particularly hard hit. While some transactions are still taking place
in properties that are at least 1-1.5 years from completion (particularly in Abu Dhabi), the
off-plan market has come to a virtual standstill. This raises significant questions over what
percentage of the development costs developers will have to pay out of their own pocket.
This factor, combined with the lack of clarity on what the “acceptable” price will be to
convince property buyers to return to the market, is likely to sustain negative investor
sentiment in the short to medium term.
Slowdown in population growth to result in oversupply in Dubai in 2009
In light of the economic slowdown, we have revised our population growth forecast
downwards for Abu Dhabi and Dubai, with the former anticipated to see a 4% increase in
2009, while the latter is expected to record no growth in population. As a result of this
revision, we expect housing supply in Dubai to outstrip demand in 2009, against our
previous expectation of an imbalance in 2010. Abu Dhabi, in contrast, is expected to
continue to experience an acute housing shortage until at least 2012, in spite of the lower
forecasted population growth.
Lack of financing and regulatory confusion harming demand
In addition to the threat of an oversupply situation in Dubai, the real estate market is being
negatively impacted by the sharp decline in availability of mortgage financing and growing
regulatory confusion. A key example of the latter is growing concern over the eligibility of
freehold property buyers to obtain residency visas. The combination of these factors is
further damaging already weakening demand. In fact, we feel that a return of sufficient
liquidity to the mortgage market is a prerequisite for a recovery in the real estate market.
While the government is attempting to revitalise the mortgage industry through efforts
such as the merger of Amlak and Tamweel under Emirates Development Bank, it appears
that these actions are unlikely to bear fruit until at least Q2-09.
Downgrading the sector
We have downgraded Emaar, Union Properties, Aldar and Sorouh to 3/Underperform. The
rating downgrade for the latter two comes in spite of an expectation of healthy growth in
the Abu Dhabi real estate sector over the long term and is driven by the prevailing
confusion over the fate of the off-plan financing model. Going forward, we expect
investors, particularly those in Dubai, to focus more on at least partially complete
properties, rather than “greenfield” projects. Moreover, lack of clarity on how drastically
the model could change is likely to keep investors focused on short-term cues rather than
long-term “value plays” in the foreseeable future.
VALUATION TABLE
Rating Target price P/E (x) P/BV (x)
New Old 2008E 2009E 2008E 2009E
Aldar Properties 3/Underperform 3.5 12 1.6 1.8 0.5 0.4
Emaar Properties 3/Underperform 2 11 2.4 2.6 0.3 0.3
Sorouh Real Estate 3/Underperform 3.5 8.5 3.0 2.8 1.1 0.8
Union Properties 3/Underperform 0.75 4.5 2.4 0.8 0.3 0.2
Source: Cheuvreux
January 2009 MIDDLE EAST House Builders
www.cheuvreux.com
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الملف الكامل :
الكنج طلع هو عكرمة …………
الكنج ……… متى الدخول وعلى اي سعر
الملف واضح مايحتاج ترجمه …..
يا بو الشباب بالله عليك لو ترجمها بالعربي يمكن بلغتنا الجميلة تتعدل هذه الأسعار اللي تجيب الجلطة .
كلام مجمع وتعال وسمع