Gulf Shares Fall on Real-Estate Concern; Tamweel, Emaar Drop

By Haris Anwar and Ayesha Daya

Nov. 12 (Bloomberg) -- Persian Gulf stocks fell, sending Dubai's index to its biggest five-day slump since at least 2003, as mortgage company Tamweel PJSC had to borrow from the United Arab Emirates central bank amid a property market slowdown.

Tamweel, the U.A.E.'s second-biggest mortgage provider, dropped to the lowest level since its listing in July 2006. Emaar Properties PJSC, the region's largest developer, sank to a four-year low as it gave buyers the option to defer payments on new homes. HSBC Holdings Plc said Dubai and Abu Dhabi real- estate prices fell in the month to October.

Dubai is bracing for a downturn in the property market as economic growth slows, reducing demand for real-estate. HSBC and Lloyds TSB Group Plc, two of the largest U.K. banks operating in the U.A.E., yesterday said they would tighten mortgage lending in the Gulf state.

``The real-estate sector is in the focus because people think we're going to see a decline in the property prices, and the credit crunch will hit banks,'' said Chamel Fahmy, senior regional sales trader at Beltone Securities Brokerage in Dubai. ``We're still 20 percent to 25 percent away from the bottom.''

The Dubai Financial Market General Index tumbled 5.5 percent to 2,214.8, bringing the five-day slump to 24 percent, its biggest such decline since at least December 2003, when Bloomberg started tracking the measure. The Abu Dhabi Securities Exchange General Index dropped 5.7 percent.

Credit Crisis

Dubai's benchmark index has lost 63 percent this year as concern deepened that the global credit crisis and slumping oil prices will slow the region's property market. Tamweel and Emaar led the decline, losing more than 75 percent each.

Today's drop left Dubai's benchmark index valued at 5.3 times the earnings of its 29 companies, the lowest level since at least February 2007, data compiled by Bloomberg show. Abu Dhabi's index trades at 6.9 times profit. The MSCI Emerging Markets Index is valued at 8.2 times earnings.

Oil fell to a 20-month low on expectations that U.S. fuel stocks grew for a seventh week as the worsening economy wears down energy demand. The Organization of Petroleum Exporting Countries' Gulf members, which produce almost a fifth of the world's oil, have used record crude income to embark on infrastructure projects including man-made islands and the world's tallest tower. Oil for December delivery fell as much as $1.63, or 2.8 percent, to $57.70 a barrel in electronic trading on the New York Mercantile Exchange.

Property Prices Decline

Tamweel lost 9.4 percent to 1.26 dirhams. Tamweel's Chief Financial Officer Gaurav Agarwal said yesterday the company received money from the country's central bank after the cost of financing rose amid volatility in credit markets.

Emaar fell 9.9 percent to 3.37 dirhams, the lowest since October 2004. The company created options for buyers to defer payment on new homes as mortgage loans become more difficult to obtain. Buyers can pay 25 percent of the value of a new Emaar property up to five years after handover.

Dubai property prices, including villas and apartments, fell 4 percent in the month to October, while in Abu Dhabi they declined 5 percent, HSBC said in a report today. HSBC and Lloyds restricted lending after house prices in Dubai quadrupled in the last five years, fueling concern that a sharp fall is imminent. The Central Bank of the U.A.E. held discussions with the finance ministry on measures to support real-estate lending amid the global financial crisis.

DFM Drops

Sorouh Real Estate Co., Abu Dhabi's second-largest property developer, declined 9.5 percent to 2.68 dirhams, bringing the five-day slump to 35 percent.

Borse Dubai Ltd., the parent of Dubai Financial Market PJSC and the Dubai International Financial Exchange, is in talks to refinance $4.2 billion of loans at interest rates tied to the price of credit-default swaps, raising the cost of the debt, said three bankers with knowledge of the transaction. Dubai Financial Market, the only bourse listed in region, dropped 2.8 percent to 1.75 dirhams.

The Kuwait Stock Exchange Index fell 2.3 percent, Oman's Muscat Securities Market 30 Index lost 3 percent, while in Qatar the DSM 20 Index retreated 4.7 percent. The Bahrain All Share Index fell 2.3 percent. Saudi Arabia's Tadawul All Share Index gained 0.4 percent.

Zain dropped 2 percent to 1,000 fils. The Kuwait-based phone company with units in 22 African and Middle Eastern nations said it will base its African business in Nairobi and plans further acquisitions on the continent.

The following stocks also rose or fell in the region. Stock symbols are in parentheses after company names:

Bank Sohar SAOG (BKSB OM), the Omani bank that started trading in Muscat last year, declined 3.1 percent to 0.16 rial after the company appointed Mohamed Kalmoor as temporary chairman after the serving chairman resigned.

Gulf Cement Co. (GCEM UH), the U.A.E.-based cement producer, plunged 7.1 percent to 3.79 dirhams after it said third-quarter profit fell 97 percent on losses from investment income.

To contact the reporter on this story: Haris Anwar in Dubai on Hanwar2@bloomberg.netAyesha Daya in Dubai adaya1@bloomberg.net