News
Al Mal puts real estate into perspective
I am increasingly impressed by the research coming from Al Mal Capital, one of the new breed of Dubai-based stockbrokers that is putting a strong emphasis on the nuts and bolts of investment analysis.
The latest bit of work that caught my eye was Al Mal's work on the Dubai property sector, released last week. After all the fuss over the Morgan Stanley report which walloped the UAE stock markets and led to complaints (in my view unjustified) to the market regulator, Al Mal was a cool and sober reappraisal of the sector, especially in the emirate which has done more than others to make real estate the dynamo of the diversified economy.
Al Mal, like Morgan Stanley, believes property prices could fall by between 10 and 15 per cent in 2010, but the difference is in interpretation of that forecast. Al Mal thinks such a fall could actually be a good thing for the overall market, dampening the speculation that has been the driving force behind the dramatic price increases of recent years. And, as if to remind us that the industry can afford such a relatively modest leveling off after its boom period, Al Mal points out that prices are up 40 per cent year on year.
The recent strength of the resurgent dollar – if it continues - will also act as a brake on speculative investment, as will the actions of the government in trying to tackle some of the high profile scandals that have hit the real estate sector this year.
It should also hammer home the message that seems to be lost on many international investors – that Dubai is no longer an energy play but a real estate-focussed diversified economy. Once that message is received loud and clear it will be to the benefit of the Dubai economy and the local stock markets.
The latest bit of work that caught my eye was Al Mal's work on the Dubai property sector, released last week. After all the fuss over the Morgan Stanley report which walloped the UAE stock markets and led to complaints (in my view unjustified) to the market regulator, Al Mal was a cool and sober reappraisal of the sector, especially in the emirate which has done more than others to make real estate the dynamo of the diversified economy.
Al Mal, like Morgan Stanley, believes property prices could fall by between 10 and 15 per cent in 2010, but the difference is in interpretation of that forecast. Al Mal thinks such a fall could actually be a good thing for the overall market, dampening the speculation that has been the driving force behind the dramatic price increases of recent years. And, as if to remind us that the industry can afford such a relatively modest leveling off after its boom period, Al Mal points out that prices are up 40 per cent year on year.
The recent strength of the resurgent dollar – if it continues - will also act as a brake on speculative investment, as will the actions of the government in trying to tackle some of the high profile scandals that have hit the real estate sector this year.
It should also hammer home the message that seems to be lost on many international investors – that Dubai is no longer an energy play but a real estate-focussed diversified economy. Once that message is received loud and clear it will be to the benefit of the Dubai economy and the local stock markets.