Realty stocks stage a comeback

UAE real estate stocks – which were hit by the global financial crisis – have moved back into the limelight thanks to renewed buying interest as government bond issues and other stimulus measures have been announced to support the economy. The real estate indices of Dubai Financial Market and Abu Dhabi Securities Exchange have outperformed the general indices from March 1 to date. The DFM's realty index rose by 19 per cent compared to the general index's rise of 4.48 per cent. ADX's realty index gained 25 per cent compared to the general index's 3.87 per cent increase. Real estate stocks have been back in action ever since the US Government announcement that it planned to buy toxic assets from banks. And this has been further boosted by the UAE Government's proactive measures to strengthen the local economy. "Once the UAE Government announces the final property market law we will have a clear picture of the medium-term movement," Amjad Bakir, Trading Manager at MAC Sharaf Securities, told Emi rates Business . "Meanwhile, the first-quarter results will set the tone for the market." Analyst Wadah Al Taha said: "Gulf markets were looking for motivation which was provided by the US stimulus plan. All UAE stocks are highly discounted and have become attractive at present levels." The ADX real estate index rose 85.90 points to close at 425.90 points on April 9 from 340 points on March 1. Aldar Properties, RAK Properties and Sorouh played a vital role in pushing the index up. By contrast, the construction index, which comprises building material and cement firms, lost 30.38 per cent over the same period. Hesham Bakry, Institutional Sales Manager at Al Futtaim HC, said: "We have to wait and see the final policy on the property market." Mathew Wakeman, Managing Director at EFG-Hermes, said the short-term outlook is positive, but added: "There is increased agreement among investors and analysts the current stimulus and quantitative easing measures in Western economies will start to deliver results and spark the first glimmers of a recovery this year. Further good news for the UAE is positive signals from China. China is a major trade partner of the UAE." Rally expected DFM and ADX are poised to bounce back from last week's losses as the market is upbeat on the latest leg of optimism. The markets will also take a cue from the rally on the Saudi markets yesterday. The Saudi index, Tadawul, closed 3.2 per cent higher at 5,200 points. Keep up with the latest business news from the region with the Emirates Business 24|7 daily newsletter. To subscribe to the newsletter, please click here .