Analysis of Dubai Property Market Resilience and Emaar’s Performance

Dubai Property Market Faces Testing Times Amid Global Economic Slowdown and Interest Rate Hikes

Dubai, known for its booming property market, may face challenges ahead as the global economy slows down and interest rates remain elevated. A recent analysis by Bloomberg Intelligence Senior Analysts Edmond Christou and Lea El-Hage highlights the potential impact of these external factors on the resilience of Dubai’s property market.

The United Arab Emirates, particularly Dubai, has seen significant gains in its property market since the peak of the pandemic, thanks to reforms that improved its global connectivity and safe-haven status. Foreign investments have poured into the market, driving growth and optimism among developers. However, the analysts point out that the current momentum could be tested by a combination of factors such as a slowing global economy, higher interest rates, and uncertainties in the market.

Developers in Dubai are now focusing on attracting investors in the mid-segment and adjusting their delivery schedules for 2023 housing units to maintain a balance between supply and demand. Despite these efforts, challenges may arise in the commercial sector due to limited availability of high-quality and green office spaces.

The analysis also delves into the performance of key UAE developers, particularly Emaar Properties and Aldar Properties. While Aldar has seen a significant surge in its stock price since 2019, outperforming Emaar, the latter has been trading at a discount to its net asset value. Emaar’s recent decision to raise its foreign-ownership limit to 100% did not immediately translate into improved performance, although the gap between the two companies has narrowed in recent times.

In terms of environmental, social, and governance (ESG) factors, Aldar seems to have an edge over Emaar, with higher ESG scores and a stronger presence in ESG-focused funds. International investors may increasingly shift their attention towards Aldar due to its superior ESG performance and ratings from third-party providers such as MSCI and S&P.

As Dubai’s property market navigates through these challenges, developers like Emaar will need to address their underperformance and ESG scores to stay competitive and attract more investors. The coming months will be crucial in determining the market’s ability to withstand external shocks and sustain its growth trajectory.