Page 13 - UNION PROPERTIES GENERAL REPORT - March 2024

Analysts told Zawya that the heralded start of UPP’s turnaround should be viewed with
cautious optimism
Dubai real-estate company Union Properties (UPP) has announced its long-awaited
turnaround in its annual results. But the real test will come within the next two years as it
competes with new housing supply due for handover from some of the emirate’s larger
developers.
UPP’s share price rallied from its February 14 low of AED 0.27 ($0.07) to reach AED 0.40
this week.
Union Properties has had its “fair share of troubles” in recent years, Vikas Lakhwani, Chief
Revenue Officer, CPT Markets, said. In addition to accumulated losses, in 2021 the then
chairman and board members were dismissed amid accusations of involvement in financial
irregularities and agreed to pay a settlement of $168.8 million.
A DFM disclosure last month showed the settlement issue was not over, as the subjects had
failed to pay, and, unable to possess and sell real-estate assets as agreed.
A director’s report published with financial results last week nonetheless cited a “robust
foundation and strategic vision”, saying the company is well positioned to play a significant
role in Dubai’s real-estate sector.
However, auditors Grant Thornton drew attention to accumulated losses of AED 2.1 billion
and liabilities exceeding assets by AED 263 million.
Operating profit reached AED 101 million, up from AED 10 million in 2022, but borrowing
costs rose to AED 114 million from AED 74.8 million in 2022 as rising interest rates in 2023
took a bite from the company’s comprehensive income, which rose to AED 837.6 million in
2023, up from AED 29.98 million.
However, with the Federal Reserve expected to impose three rate cuts this year, and GCC
banks likely to follow suit, interest rates are likely to fall, easing borrowing costs, said
Lakhwani.
Leaders in Dubai real estate
Major developers including Dubai Financial Market–listed Emaar as well as Damac and
Nakheel, which has announced a merger with Meydan, are among those that continue to
deliver residential communities, and new developers have entered the market since the
COVID-19 pandemic, said one analyst.
According to Lakhwani, UAE real estate is working “on a different level”, with prices rising,
while other countries have seen them stagnate or fall.
A Dubai residential market review by Knight Frank at the end of last year said Dubai was a

https://vividdubai.com/2024/03/22/analysis-shares-of-union-properties-are-rallying-after-a-
long-lull-but-real-test-in-2-years-zawya/