Navigating the Challenges Ahead: Dubai Property Market Analysis by Bloomberg Intelligence Senior Analysts

The Dubai property market is facing a potential test of resilience as a slowing global economy and elevated interest rates could impact its growth. Bloomberg Intelligence Senior Analysts Edmond Christou and Lea El-Hage have pointed out that the Gulf region, particularly the United Arab Emirates and Dubai, has seen significant gains in property markets since the pandemic peak. These gains were driven by reforms that increased connectivity and safe-haven status, attracting foreign investments.

Developers in Dubai are anticipating a new wave of interest from investors, especially in the mid-segment. To manage supply-demand imbalances, some developers are rescheduling housing unit deliveries to 2023. Commercial demand is expected to remain strong due to limited availability of high-quality and green office spaces.

Despite the positive outlook, there are concerns about the underperformance of Emaar Properties compared to its peers. While the company raised its foreign-ownership limit to 100%, its share price continues to lag behind UAE real estate peers. The slowing global economy, lower oil prices, and uncertainties pose threats to the real estate momentum in Dubai.

Emaar Properties is also trading at a discount to its net asset value, with a 2023 dividend yield that has improved but still lags behind its rivals. The company’s ESG (environmental, social, and governance) scores are also below peers, particularly in areas related to energy management and greenhouse gas emissions.

On the other hand, Aldar Properties, a regional peer of Emaar, has seen strong ESG scores and is attracting more interest from international investors. Aldar’s environmental, social, and governance scores surpass global peers, and third-party providers have rated the company highly. This puts Aldar in a better position to attract ESG-focused investors compared to Emaar.

In conclusion, the Dubai property market’s resilience to external shocks will be tested in the coming months, with developers like Emaar Properties focusing on strategies to improve their performance and attract investors. Aldar Properties, with its strong ESG scores, may have an edge in appealing to international investors looking for sustainable and socially responsible investments.