Dubai: Dubai stocks hit a 27-month low on Thursday on the back of sharp falls in the real estate market and a drop in liquidity levels.
The Dubai Financial Market Index ended the day’s trading down 1.83 percent on 2,947.99 points breaching the 3,000-point psychological barrier.
The Dubai bourse, the most exposed to the global markets in the Gulf region, dropped 3.1 percent by the close of the Muslim trading week.
The market has shed 12.5 percent since the start of the year as cash injections dropped sharply, with the main fall coming from the vital real estate sector.
“Dubai market has underperformed its (Gulf Cooperation Council) GCC markets losing over 12 percent (YTD) dragged by the sell-off in Real Estate sector,” M.R. Raghu, head of research at Kuwait Financial Center (Markaz) said.
Most of the seven Gulf bourses have made good gains in 2018 due to a partial recovery in oil prices, with Saudi stocks rising 12 percent.
“Fundamentally, the real estate prices have been falling and the market has been sluggish,” Raghu told AFP.
Dubai real estate witnessed a 46 percent fall in off-plan sales by value in the first quarter, and a 24 percent decline in previously owned resales, he said.
The real estate sector is one of the main pillars for Dubai’s highly diversified economy, which is not dependent on oil.
The index of the real estate sector on Dubai bourse has shed around 18 percent since the start of the year with property giant and market leader Emaar dropping 22 percent.
Damac Properties, a leading real estate developer, was down 26 percent and troubled Drake and Scull International shed 50 percent since January 1.
A massive fall in liquidity levels and reports that international investors, an important component in the market, have moved to Saudi Arabia, are other causes for the downturn, analysts said.
According to local economic reports, liquidity levels dropped a massive 35 percent in April alone.
Agence France-Presse