Page 20 - UNION PROPERTIES GENERAL REPORT - March 2024

3/25/24, 11:12 AM Analysis: Shares of Union Properties are rallying after a long lull, but real test in 2 years
But Lakhwani said new developers have entered the market from India and Pakistan and Saudi
Arabia and seen projects sell swiftly.

Major players including Emaar, Damac and Nakheel have huge projects scheduled for delivery
starting in 2025, with more to come in 2026 and 2027, and Lakhwani added that it would be

“interesting” to see what happened once those properties start to reach the ready market in the next
two years.

“The off-plan market is enjoying this ride,” he said, “but what we need to see, once they are ready to
move in, are the real tenants.”

Geopolitical tensions elsewhere have seen real-estate investors “park money” in Dubai, buying

multiple properties, with property sales and rentals prices rising, he said, but time will tell if they find
tenants when construction is complete.

New investors in UPP

UPP has found new investors, Lakhwani said, with net cash from investing activities more than
doubling to AED 243.5 million in 2023.

“They are trying to restructure the whole debt structure, but an increase in their revenue will help the

company raise more funds through public and private debt,” he said. “For them to settle these huge
losses, they need that inflow, they need that new investors’ money to recycle everything and put that
in the right manner.”

Bhavik Mehta, Deputy Head of Research, Investment Products, Century Financial, said that UPP is

diversified, with 14 subsidiaries including Dubai Autodrome LLC and Al Etihad Education, which
could protect it if the real-estate market falls.

A settlement with Dubailand and Emirates NBD allowing it to develop land originally intended for a
theme park was another factor in its favour, adding “big potential” to both top and bottom line, he said.

Hani Abuagla, Senior Market Analyst at XTB MENA, recommended both caution and optimism.

“The company’s strategic five-year plan and its subsidiaries’ strong performance underscore its

potential to overcome current financial burdens,” he said. “Moreover, an anticipated ease in
borrowing costs could further mitigate finance-related concerns, enhancing UPP’s debt management
capabilities.”

Other companies such as Damac Properties and Deyaar Development have incurred significant

losses and share-value drops in the past, Abuagla said; however, operations restructuring and
improving debt management have helped improve the financial picture over the years.

(Reporting by Imogen Lillywhite; editing by Seban Scaria)

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