Abu Dhabi-based property developers are in desperate need of funding with the emirate's largest developer Aldar Properties is in urgent need of nearly Dh10 billion to survive, according to a Bank of America Merrill Lynch note.
Though “Aldar will benefit from sovereign support, we are skeptical about the terms of a new financing solution. Aldar could surprise on the upside if it received an explicit sovereign-guaranteed issuance in the current easier credit market,” Dubai- based analyst Abdelrali El Jattari wrote in a report quoted by Bloomberg.
Property prices in Abu Dhabi have declined by more than 30 per cent from their peak in mid 2008, according to Jones Lang LaSalle estimates published in February. The developer has about Dh26 billion of debt outstanding, according to data compiled by Bloomberg.
Aldar said earlier that it had sold assets on Yas Island to government for Dh9.14 billion .
Sorouh Real Estate also needs funding, the report said. “While the company has enough liquidity to manage its short-term commitments, we believe that access to external funding is essential if it is to deliver on time,” El Jattari isa in the reort - quoted by Bloomberg.
Emaar Properties is Bank of America’s preferred real estate stock in the UAE for its “stronger fundamentals, more attractive valuation and absence of funding issues despite the short-term weakness reflected in third-quarter results,” El Jattari wrote.
“We expect Emaar to raise more debt locally to finance its international development,” he said. The developer raised $500 million from the sale of a five-year convertible bond to help repay short-term debt.