Emaar Properties closed 6.49 per cent higher at Dh4.10, rebounding from its lowest level in 52 weeks at Dh3.85

Emaar Properties closed 6.49 per cent higher at Dh4.10, rebounding from its lowest level in 52 weeks at Dh3.85

Stock results of Emaar Properties and other units exceeded expectations and uplifted the mood at the Dubai index on February 14, 2019, which ended more than 1.65 percent.

Emaar Properties closed 6.49 percent higher at Dh4.10, rebounding from its lowest level in 52 weeks at Dh3.85. Emaar Properties was the most active stock in trade, contributing 27 percent of the total traded value. About 19 million shares changed hands during the day, out of which 6 million shares were traded in an auction.

“In Dubai, there could be a slight rebound during today’s session now that Emaar Malls has come out with its earnings, posting a solid 7 percent growth in net profit YoY with plans for expansions to be ready within the first half of 2019,” Issam Kassabieh, Senior Financial Analyst, Menacorp said in a morning note.

Emaar Development closed 9 percent higher at Dh3.69. Emaar Malls closed 6 percent higher at Dh1.59. Dubai Investment closed 4.55 percent higher at Dh1.15. In other property stocks, Arabtec closed 0.49 percent higher at Dh2.05.

Aldar Properties closed 11.49 percent higher at Dh1.65. About 56 million shares changed hands in Aldar Properties, the highest volume since April 2015.

Two years of falling property prices caused by an oversupply of projects and completed homes have necessitated the need for some oversight from the government. The sector as a whole has welcomed the decision.

But regulating the market will not be easy. The end goal here cannot be simply to prop up property prices. To focus solely on that would create other problems, both in the construction industry and on local stock markets. The committee, whatever it decides, must move carefully and avoid causing excessive and unnecessary economic complications.

The high rate of lending combined with the oversupply of properties has the potential to create problems that could easily spread to the banking sector. The committee faces a daunting challenge, but a challenge that must be addressed quickly to ensure Dubai’s continued economic growth.

The decision to establish a “Higher Real Estate Planning Committee” by His Highness Sheikh Mohammed Bin Rashid Al Maktoum, Vice-President and Prime Minister of UAE and Ruler of Dubai, has sparked a lively debate across the emirates about what the committee’s first steps should be. No one, however, is debating the need for this committee, which was established to find ways to strike a balance between real estate supply and demand, make sure launches of “me-too” projects are avoided, and ensure launched projects add real value to the national economy.

The decision to establish a “Higher Real Estate Planning Committee” by His Highness Sheikh Mohammed Bin Rashid Al Maktoum, Vice-President and Prime Minister of UAE and Ruler of Dubai, has sparked a lively debate across the emirates about what the committee’s first steps should be. No one, however, is debating the need for this committee, which was established to find ways to strike a balance between real estate supply and demand, make sure launches of “me-too” projects are avoided, and ensure launched projects add real value to the national economy.

Two years of falling property prices caused by an oversupply of projects and completed homes has necessitated the need for some oversight from the government. The sector as a whole has welcomed the decision.

But regulating the market will not be easy. The end goal here cannot be simply to prop up property prices. To focus solely on that would create other problems, both in the construction industry and on local stock markets. The committee, whatever it decides, must move carefully and avoid causing excessive and unnecessary economic complications.

It will not be an easy task and will require both political will and an informed understanding of local market dynamics. Three key tasks have to be addressed through the committee.

  1. Balancing of supply and demand: The oversupply must be reduced, a process that could take longer than many developers are prepared for. Obviously, projects cannot just be stopped, so a sustainable, long-term plan that merges growth with supply have to be created.
  2. Allowing private developers to compete projects: Currently, government-backed developers dominate the market, and while they have provided stability and steady dividends to their investors, the market should be opened up in such a way that it allows private players also to thrive.
  3. Examine the role of banks and the lending practices: These are factors that have helped drive the current imbalance in the market place. Low interest rates and a highly competitive banking sector have created an environment that caters not to families looking for a home, but also to investors looking to make profits by “flipping” properties.

The high rate of lending combined with the oversupply of properties has the potential to create problems that could easily spread to the banking sector. The committee faces a daunting challenge, but a challenge that must be addressed quickly to ensure Dubai’s continued economic growth.

About Pavan Rai

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