HSBC bullish on Dubai property market; upgrades Emaar companies

Dubai’s residential property market is witnessing a huge fillip despite supply concerns and negative population growth thanks to home buyers flocking to larger villas and apartments during the pandemic.

"The globally synched post-pandemic migration to larger homes is also reigniting Dubai’s residential property market. The reported sales rebound in Dubai YTD has been remarkable, Stephen Bramley-Jackson, Global Head of Real Estate Research at HSBC wrote in a note.

“Based on quarterly trends, it has really been the last two (and at the end of this month likely three) quarters that have seen the pivot to price appreciation, following a multi-year period of price depreciation,” Bramley-Jackson noted.

The bank said Dubai-listed developer Emaar Properties and its property development arm, Emaar Development are well placed to take advantage of this trend. Emaar Malls is expected to benefit from the Dubai Expo.

The note said Emaar Properties offers the best means of capturing this trend, offering liquidity and a share price that provides a 90+ percent correlation to property prices, the note said.

HSBC has upgraded Emaar Properties to ‘Buy’ from ‘Hold’ and raised the target price to 5.20 dirhams ($1.41) from 3.83 dirhams, despite a development pipeline bias to apartments (vs villas) and an increasing allocation to retail.

The bank also upgraded Emaar Development to ‘Hold’ from ‘Reduce’ with a target price of 3.89 dirhams from 2.51 dirhams. The company is on track to record its highest half yearly sales ever in 1H21 and 12 percent higher net profit in 2021, it estimated.

For Emaar Malls, HSBC has revised estimates after the 1Q21 results, and increased revenue estimates in the range of 5- 7 percent in anticipation of a slightly improved retail market in Dubai, accentuated by the Expo. It raised the target price to 2.03 dirhams from 1.81 dirhams and maintained the rating at ‘Hold’.




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