Dubai stocks posted their biggest weekly decline in almost three months as concern grew about a slowdown in the emirate’s real estate industry.
The DFM General Index retreated 1.5 percent, the most among more than 90 gauges tracked globally by Bloomberg after Slovakia’s, extending the drop this week to 5.4 percent. Four out of the five biggest contributors to the day’s slump were property-linked stocks. Arabtec Holding PJSC, the largest construction company in the United Arab Emirates and the most-traded stock in Dubai on Thursday, lost about 1.1 billion dirhams ($299 million) since it reported its largest quarterly loss on record on Tuesday.
"If Arabtec as a contractor is losing money, it means there are not many new developments or tenders coming into the market," said Nabil Rantisi, managing director of Abu Dhabi-based Mena Corp. Financial Services, the biggest brokerage by traded value in the U.A.E. "Our market is real estate centric and there’s a slowdown in real estate in general. Our clients are staying away from the market right now."
Investors should prepare for more pain in Dubai’s property market in 2016, according to Standard & Poor’s, even as the industry heads for its worst year since the financial crisis. Not only have Russian and European property buyers stayed away from the market after their currencies declined, but a more than 40 percent drop in the price of Brent crude in the past 12 months has weighed on spending in the six-nation Gulf Cooperation Council, further impacting sales.
Arabtec, controlled by Abu Dhabi’s Aabar Investments PJSC, reported a 24 percent decline in revenue in the third quarter as costs surged 21 percent and sales dropped. The company also reversed more than $100 million worth of previously-recognized claims.
Emaar Properties PJSC, Damac Properties Dubai Co., Emaar Malls Group PJSC and Union Properties PJSC also fell on Thursday.