Table of Contents
Investment thesis .....................................................................4
Underlying fundamentals suggest earlier recovery for Abu Dhabi property stocks ....7
Silver-lining for Dubai — improving transaction volume and consolidation ..............9
Takeaways from property market downturns in Asia ................................................10
Near-term project funding will be a challenge for the market in general...................11
Valuations ...............................................................................12
Methodology and key assumptions............................................................................12
Property stocks on P/BV multiples ............................................................................15
Comparable analysis ..................................................................................................16
Key Investment Risks ................................................................................................17
Dubai Property market ...........................................................19
Residential market to see rising supply...............................20
Dubai population – expect 5% population decline in 2009........................................21
Expect residential supply overhang to deepen in 2009 ..............................................26
Commercial sector — supply rising .....................................29
Office sector fundamentals to mirror modest economic growth and negative
population growth in 2009.........................................................................................29
Retail sector may witness lower rates given low demand..........................................30
Hotel revenues to remain in check in the near term...................................................31
Regulatory framework in Dubai ................................................................................33
Abu Dhabi Property................................................................35
Residential Market faces short supply .................................36
Population: we expect 1% growth in 2009 ................................................................37
Residential supply shortfall likely until 2012 ............................................................38
Commercial sector — still facing shortage..........................42
Office sector – Demand driven by lack of quality office space .................................42
Retail sector — near term supply limited ..................................................................43
Hospitality — limited supply but slowing traffic.......................................................44
Regulatory framework in Abu Dhabi.........................................................................46
Company Profiles...................................................................47
Aldar Properties......................................................................48
Company Background ...............................................................................................51
Property portfolio; rising portion of investment property..........................................52
Landbank value — 37% of SOTP adj. NAV.............................................................54
Sorouh Real Estate.................................................................56
Company Background ...............................................................................................58
Property portfolio — rising portion of investment property ......................................59
Landbank value — 30% of SOTP adj. NAV.............................................................61