Report Summary

Oil declined by 5% to USD 65, spurring volatility across global equities. Broad reallocation from the U.S. toward emerging markets continues, with institutions investing around USD 20 billion into emerging economies. Within the UAE, large-cap names like Emaar and Aldar maintain foreign investor interest amid ongoing real estate expansion, though 2026–2027 forecasts call for mid-single-digit property price growth. Local markets may fare relatively better should a U.S. correction occur. Notable developments include shifting fee structures for Salik and healthy dividend yields from select industrials. Overall, the outlook remains constructive, especially for key real estate and select income stocks.

UAE Markets

UAE Real Estate Market Strategy

Market Stabilization & Maturity: The UAE real estate sector has successfully transitioned from a period of rapid, volatile growth into a sustainable "cruising speed" in 2026. This phase is defined by a healthy balance between supply and demand, where the influx of new residents and international capital comfortably meets the steady delivery of new housing units.
Massive Revenue Visibility: The industry is currently anchored by a record-high construction backlog (approximately AED 130 billion for Emaar Development alone). This "to-do list" provides guaranteed work and clear financial visibility through 2027, ensuring that major developers remain highly cash-generative even as new sales begin to normalize.
Compelling Value Opportunity: Despite record-breaking profits and strong operational performance, the sector remains significantly undervalued. For instance, Emaar Properties is trading at a roughly 40% discount to its actual asset value (0.6x P/NAV), offering a rare entry point for investors to buy high-quality assets at a "sale" price.
Shift Toward High Income (Dividends): With the focus moving from speculative price jumps to stable returns, the sector has become a top destination for yield-seekers. Investors can expect industry-leading dividend yields, ranging from a base of 6.6% up to an "upside scenario" of 8.0% for parent companies like Emaar Properties.
Strategic Growth & Expansion: While the Dubai market provides immediate income, the long-term outlook is driven by strategic expansion. Companies like Aldar are reinvesting heavily to grow their footprint beyond Abu Dhabi and into Dubai and international markets, positioning themselves for the next cycle of capital appreciation starting in 2027.

Weekly Market Recap & Top Picks

The GCC fixed-income market is characterized by healthy issuance and a clear "flight to quality." While Bahrain and Saudi Aramco attracted massive institutional demand for their high-grade offerings, DAMAC’s high-yield return highlighted a widening spread between leveraged real estate and sovereign credits. As issuers refinance upcoming maturities, investors can find value by balancing low-risk sovereign carry with tactical entries into quality corporate paper.

DAMAC 2029 Sukuk (Entry: 99.50 | YTM: 6.28%) – Offers excellent value as a replacement for the maturing April 2026 sukuk; expected institutional buying to roll over positions will provide strong price support.
Bahrain 2038 Bond (Price: 99.50 | YTM: 7.16%) – A standout sovereign pick for a rate-cutting cycle, providing a high yield-to-maturity for government credit after settling successfully without stabilization tools.
Saudi Aramco 10-Year Bond (Price: 99.00 | YTM: 5.12%) – Provides a "gold standard" carry trade with low credit risk and implicit sovereign backing, likely to appreciate further if global interest rates decline.

News

ADNOC Distribution (ADNOCDIST) delivered a strong 15% YoY profit increase in FY25 driven by robust margin expansion and operating leverage despite flat revenue, though this was slightly offset by a threefold spike in impairment losses and tightening liquidity as cash reserves declined.
Salik is transitioning to a dynamic inflation protection mechanism that replaces the fixed 4 AED rate with a blended tariff based on peak, off-peak, and free travel periods, ensuring concession fees remain within the 15% to 25% range based on annual Dubai CPI adjustments.

Investment Recommendations

Pure Health (PUREHEAL) – Buy at AED 2.75, target at AED 2.90, stoploss below AED 2.70.