Dubai’s financial markets down 3.1pc, led by real estate sector

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DUBAI: Dubai stocks hit a 27-month low on Thursday on the back of sharp falls in the real estate market and a drop in liquidity levels.

The Dubai Financial Market Index ended the day’s trading down 1.83 per cent on 2,947.99 points breaching the 3,000-point psychological barrier.

The Dubai bourse, the most exposed to the global markets in the Gulf region, dropped 3.1 per cent by the close of the Muslim trading week.

The market has shed 12.5 per cent since the start of the year as cash injections dropped sharply, with the main fall coming from the vital real estate sector.

“Dubai market has underperformed its (Gulf Cooperation Council) GCC markets losing over 12 per cent (YTD) dragged by the sell-off in Real Estate sector,” Kuwait Financial Centre (Markaz) head of research M R Raghu said.

Most of the seven Gulf bourses have made good gains in 2018 due to a partial recovery in oil prices, with Saudi stocks rising 12 per cent.

“Fundamentally, the real estate prices have been falling and the market has been sluggish,” Raghu added.

Dubai real estate witnessed a 46 per cent fall in off-plan sales by value in the first quarter, and a 24 per cent decline in previously owned resales, he said.

The real estate sector is one of the main pillars for Dubai’s highly diversified economy, which is not dependent on oil.

The index of the real estate sector on Dubai bourse has shed around 18 per cent since the start of the year with property giant and market leader Emaar dropping 22 per cent.

Damac Properties, a leading real estate developer, was down 26 per cent and troubled Drake and Scull International shed 50 per cent since January 1.

A massive fall in liquidity levels and reports that international investors, an important component in the market, have moved to Saudi Arabia, are other causes for the downturn, analysts said.

According to local economic reports, liquidity levels dropped a massive 35 per cent in April alone.