Dubai: Investors wanting to still catch the action in the UAE property markets - but with no plans to actually buy a home – need not worry. They can always look to pick the real estate stocks on DFM and ADX and can pick off some handsome returns on those investments.
And if they broadened their investment outlook to beyond property stocks, they will be doing just as well. Because these days, the Dubai stock market, in particular, is on a tear, while an expanding bouquet of ADX-listed companies are offering up some mighty impressive returns. In triple-digit terms.
So, should investors bulk up on property assets or property stocks? A new report from Reidin-GCP states: “Looking solely at yields alone for this year, real estate, and especially apartments, seems to be clearly the superior choice. However, this fails to take into account the significant price appreciation many DFM and ADX stocks have seen.”
These have been quite significant, no less. According to Kamco Invest’s daily regional market tracker, the DFM has returned a 17.8 per cent increase year-to-date, while the ADX – after a stellar growth run in 2022 – is working its way back into the black. Year-to-date, the latter index is down 6.2 per cent.
As for the DFM, some of its big-name property stocks are currently on the fringes of being at their 52-week highs. The overall index this week has touched its 2015 peak.
“Whether it’s Emaar, Deyaar or Union Properties, the stocks seem primed to push through their respective 52-week highs,” said an analyst. “Investors seem to have redoubled their efforts to gain exposure to Dubai realty via stocks, expecting the property market momentum to sustain through H2-23.” (In early trading on Wednesday (July 5), the UP and Deyaar stocks are down, with a bit of profit-taking happening.)
This wave has lifted stocks with exposure to the property sector, such as Amlak, the mortgage lender. (Of course, the company has also been working towards clearing
Aldar’s star turn
On ADX, Aldar is up 16.7 per cent in the year-to-date and following on a 6.2 per cent spike in 2022.
And last year, the ADX was 21.86 per cent higher to be an out-performer among major global stock markets. And a 3-year run? Up 122 per cent.
“Looking at the index since January 2020, this the case in favour of real estate stocks in the UAE becomes stronger,” states the Reidin-GCP report. “Aldar is now clearly the standout performer. More importantly, from a mid-sized retail investor’s standpoint, the case for investing in real estate stocks over real estate seems to have been the ‘smart money move’.”
This way, they would be ‘deriving the benefits of both asset classes. As stocks, they will naturally be more liquid and come with significantly lower transaction costs, while still being able to capture the rising value of UAE real estate.”
