Emaar shares plunge 7.98% as concerns surface over sector

Dubai: Real estate concerns continued to be one of dominating reasons for the fall in the markets on Sunday.

Views on the property market overheating and the sector in for a correction along with the off-plan sales laws expected to slow down speculation in the secondary market have been cited as reasons for the real estate sector stocks to have taken a beating.

Real estate index on Dubai Financial Market fell 668 points or 7.30 per cent to close at 8,490. Emaar Properties, the largest Arab developer, dived 7.98 per cent to Dh8.07. The most liquid stock of the day, trading shares worth Dh417.7 million or 39.5 per cent of the value traded on the market yesterday, it touched a low of Dh7.88.

"It has more to do with the most liquid stocks in a falling market," said P Krishna Murthy. It is one of the most liquid stocks in the in the GCC, and is the target for foreign investors who can enter and exit quickly. It is trading at single digit price multiples, less than two times the book value, and is very attractive to buy, but the market is not in a mood to look at the rationales and reason... I would say as a liquid stock it has to pay the price in times of bad sentiments."

Shiv Prakash of Mac Sharaf Securities agrees. "With the real sector getting hammered, Emaar can't but be affected by it. Also, it had a sideways trend and when the market moved towards 5800, it did not move up, and now that the markets are falling so when the markets are falling, they definitely follow the fall. If it falls it takes the index with it."

It was no different on Abu Dhabi Securities Exchange with real estate stocks leading the decline. The real estate sector index plunged 8.30 per cent. Aldar Properties and Sorouh Real Estate, the two most liquid stocks with traded shares valued at Dh149.933 million and Dh95.59 million, plunged 8.77 per cent and 8.48 per cent respectively.