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Al Ramz Capital has increased the fair values of three real estate stocks in Dubai on the back of strong Q4 earnings and a positive outlook for demand.
"We remain positive on the Dubai real estate market and reiterate our 'Overweight' rating on each of the four names we cover in this space," said Al Ramz Investment Research in a new report on Wednesday.
The Dubai real estate market is booming, with residential pricing at an all-time high. In fact, the current price index is up 60% from the lows of 2020 and is 5% higher than the previous cycle high of 2014, the report said.
"Despite elevated prices and higher interest rates, demand remains encouraging driven by economic expansion, population growth, the favourable global positioning of the UAE, and government initiatives including visa reforms."
The strong performance and fundamentals of the real estate companies were also reflected in dividend payouts by the listed players, Al Ramz said.
The brokerage has increased the fair values for three stocks of the four on the back of higher estimates.
Emaar Development: Its topline more than doubled year-on-year to AED4.6 billion and exceeded expectations by around 50%. While it kept its dividend stable at AED0.52 per share, it "still implies an impressive yield of 6.5%". Its fair value has been raised to AED9.40 from AED8.10 previously.
Emaar Properties: The developer saw its topline expanding by 39% YoY comfortably beating consensus estimates. The company proposed a dividend of AED0.50 for 2023, which is double the amount of 2022. Al Ramz riased its fair value to AED9.90 from AED8.80 previously.
Deyaar Development: The company increased its revenues by 39% YoY in Q4. Full-year net income increased four-fold, almost double compared to the previous year. For the first time in its history Deyaar has proposed a dividend; of AED0.04 per share. Its fair value has been raised to AED0.92 from AED0.86 previously.
TECOM Group: The commercial real estate player's Q4 jumped to AED311 million exceeding both Al Ramz estimates and the consensus by about 70%. It paid a dividend of AED0.08 per share for H2 2023, in line with its stated dividend policy. The brokerage maintained its fair value at AED3.35.
(Writing by Brinda Darasha; editing by Seban Scaria)
