More Bad News For Dubai Realty : Credit Suisse Outlook
Lately, Dubai’s much talked about real estate sector has been badly hit by the Credit Crunch, perhaps more so than its neighbour Abu Dhabi whose future looks brighter due to its enormous oil & gas reserves.
Credit Suisse has just published their outlook on Dubai realty firms’ profit for 2009 in International Property Investment for the 4th quarter of 2008 :
Credit Suisse expects earnings of Dubai-based developers to reflect the impact of the the global liquidity crunch that has slowed down the sector drastically.
In its fourth quarter preview on UAE real estate, Credit Suisse said it is projecting higher earnings for Abu Dhabi-based Aldar Properties and Sorouh Real Estate but expects the opposite for Dubai’s Union Properties and Emaar Properties.
“We expect earnings for Union Properties to decrease by 50% and Emaar 43%.” Credit Suisse said net profit for the fourth quarter of Emaar Properties, the region’s biggest property company, is expected to drop from the previous quarter to Dh855 million on slower revenue growth. Emaar posted a net profit of Dh1.51 billion in the third quarter of 2008.
The article goes on to conclude that CS expects Abu Dhabi to fare better in times of crisis due to the under supply of finished real estate projects unlike Dubai which seems to have over supply of both finished and off plan projects :
Dubai property developers are feeling the pinch of a global economic slump, with property prices dropping 23% last December and continuing to fall, as thousands of expatriates lost jobs, leaving a huge oversupply of housing units.
Abu Dhabi developers will fare better than their Dubai counterparts with visible undersupply sustaining property prices and demand.
Abu Dhabi will fare slightly batter, thanks to massive injections of cash by the government, and the top property company, Aldar Properties’ net profit for the period is expected at Dh1.2 billion, 62% higher from the third quarter, with full year earnings expected at Dh4.6 billion.
Credit Suisse said, however, that about 40% of Aldar’s full year earnings is coming from a gain of revaluation of investment priorities, “which we expect to decrease in first quarter of 2009.”
2009 seems to be a real testing year for Dubai and its mega ambitions, not least so for its hyper real estate sector and this blog will continue to monitor the ups and down of the same.
