The Declining Stock Market Conditions In Dubai

After two full years of significant rental and capital growth across most of the Dubai’s real estate market, 2015 turned out to be the turning point in the market. When market slowed down in 2015, negative sentiments around the market were rotated but the real estate performance in Dubai was still better than most of top places around the world.

According to the report by real estate website of Bayut.com, the prices of Dubai’s real estate market will regain their faltering prices in 2016 but this has not happened in the first quarter of the year so we are hopeful it would happen in the later period of 2016. The report also clearly mentioned that though the market slowdown continues, it is expected of real estate in Dubai to take a U-turn and start heading upwards.

This expectation was not made out of the blue rather it was based on four factors: A continuous rise if the population Dubai and UAE, its importance as the hub of regional business, its status as one of the finest tourist spots, and last its world class hospitality and leisure facilities.

In 2015, Dubai saw its main market falling but 13 percent which of course raised concerns amongst the investors. The General Index of Dubai Financial Market was also down 5.4 percent.

In spite of all the optimistic and positive predictions about the stock market scene in UAE for 2016, it is not an exaggeration to say that the stock markets are not doing even close to what was anticipated of them. They are on a constant decline this year and it cannot be determined whether this trend would be going backward any time soon.

Talking about the Easter weekend in UAE, the stock markets continued to inch lower amidst the lackluster trading as the Easter holidays kept innumerable markets closed around the globe. This resulted in a steep reduction of foreign participation which has direct impact on the stock markets.

Emaar Properties which is the largest publicly traded property company in UAE has suffered the most losses in stock markets in the region while Abu Dhabi Commercial Bank has seen a vivid reduction in their capital.

This is not a good news or omen for the future of stock markets in UAE. The traders and giant companies are in troubled waters because if this situation persists for a longer period, it could bring bad news for the region.

The prevailing situation in Dubai is anything but promising and it brings back the dark days of the year 2009 when the stock markets faced one of its worst times. The financial crisis in 2009 affected the country great deal as a result of Dubai’s largest investment companies asking their global market lenders to delay repayments. No investors in the stock markets of Dubai want to live those horrified days.

The General Index of both Dubai Financial Market and Abdu Dhabi Securities Exchange has declined by 0.4 percent this year. Because the UAE has a diverse market thereof more than 60% decrease in the oil prices globally have not held such a bad impact on its economy and stock markets as it has affected other Arabian Gulf countries.

Supply and demand, the most basic of economics mechanics can be pretty easily applied to real estate. Demand is fueled by end users and when end users are certain that the prices are going to drop (one of the largest factors being the constant decline in the prices of oil), they will not invest right now. They would wait until the stock market reaches its lowest point.

Brought you by Istathmir

Archives