Strategy Note /

DUBAI: Cheap stocks but expulsions cast a shadow

    Hasnain Malik
    Hasnain Malik

    Strategy & Head of Equity Research

    Tellimer Research
    12 June 2017
    Published byTellimer Research
    A precedent for expat expulsion on the basis of nationality – Dubai real estate stocks have de-rated in the past couple of years as the oil price fall has rippled into completed and off-plan real estate prices. This has left these stocks, such as local bellwether Emaar Properties, cheaply valued on price/book versus history. The last week has seen one specific expatriate nationality, Qataris, officially given a short period of time to exit the country, in line with federal (UAE) foreign policy. While this specific nationality accounted for only 2% of all investment in the real estate market in 2016 and regardless of whether this expulsion proves to be temporary, is there a risk that this precedent prompts a reappraisal, over time, of the long-term attraction of a real estate sector that is generally known for its open doors and diversified, multinational base of buyers? Traditionally, Dubai has acted as a hub city for the wider region and as a haven for “refugee capital”. Alongside tourism and transport, the ecosystem of foreign freehold real estate and foreign freezones are critical. Perhaps, Dubai, particularly for the “uber rich”, is not judged on an absolute basis (are investment and residency conditions open and transparent) but rather on a relative basis (merely more open and transparent than elsewhere in the region).