Page 14 - UNION PROPERTIES GENERAL REPORT - March 2024

market once hindered by oversupply, but there are 13,000 homes to be delivered per year
over the next six years, which the review regarded as “undersupply” against projected
population growth.
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)
imogen.lillywhite@lseg.com
Disclaimer: This article is provided for informational purposes only. The content does not
provide tax, legal or investment advice or opinion regarding the suitability, value or
profitability of any particular security, portfolio or investment strategy. Read our full
disclaimer policy here.
© ZAWYA 2024
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