The liquidity of nine real estate companies listed on the Dubai Financial Market and Abu Dhabi Securities Exchange, as of the end of June 2019, reached about 20.558 billion dirhams, down by 18.24%, compared to the end of the first half of 2018.

At a time when a real estate expert stressed that the liquidity levels of major real estate companies in the UAE are still good, and that the decline in some companies is caused by the use of liquidity in the development of large projects, financial analyst stressed the existence of «liquidity» in some real estate companies in the market, and that the liquidity cycle Real estate companies now have longer than in previous times, calling on companies to mechanisms to free this «latent liquidity», and not to rely on sales from real estate projects, and to have other income-generating assets.

Financial liquidity

In detail, the liquidity of nine real estate companies listed on the Dubai Financial Market and Abu Dhabi Securities Exchange, as of the end of June 2019, amounted to about 20.584 billion dirhams, according to a monitoring conducted by «Emirates Today».

Liquidity comprised of (cash at banks and short-term bank deposits) during the period witnessed a decrease of 18.24% compared to the same period last year, when the liquidity of these companies amounted to about 25 billion and 177 million dirhams.

Emaar Properties alone accounted for 32% of the total liquidity, reaching AED 7,789,900,000, while DAMAC Properties, the second largest real estate company in the market in terms of liquidity, amounted to AED 5,585 million. By 23%.

Arabtec was one of the biggest decliners in liquidity, after falling 27.6% to AED 918.6 million, while RAK Properties saw a slight increase of 0.9% to AED 404.2 million.

Good levels

"The liquidity levels of major UAE real estate companies are still good," said Muhannad Al-Wadi, managing director of Harbor Real Estate, adding that their decline in some companies was caused by the use of liquidity to develop large projects.

He explained that «most of the liquidity of real estate developers are the payments that companies get from the sale of real estate», stressing that companies that have good liquidity currently follow good strategies for sale, and diversify sources of income.

"All property developers should not rely solely on sales from real estate projects and have other income-generating assets," he added.

To avoid exposure to a liquidity crunch, Al-Wadih said, low-liquidity companies are required to develop long-term strategies to help them cope with economic changes and market conditions, as well as diversify sources of income through income-generating assets as well as sales of real estate units.

He said several real estate companies are currently using his company to develop new strategies to cope with market conditions.

Seize opportunities

He explained that «companies that have good liquidity, especially in the current period, can seize the opportunities in the market, especially before the Expo 2020».

Al-Wadih pointed out that during the current period, companies are able to obtain land at good prices, and that the costs of construction and construction have fallen, thus, the return of companies will be greater during that period.

«Latent liquidity»

For his part, said member of the National Advisory Board of the Institute of Investment and Securities in the United Arab Emirates, Wadah al-Taha, that «there is (latent liquidity) of some real estate companies in the market, because of the correction in the current real estate market».

He explained that «the liquidity cycle of real estate companies is now longer than the previous times», pointing out that there are some companies were unable to match the market variables, and liquidity has become confined in the units ready.

Taha stressed the need for these companies to put in place mechanisms to liberalize this «inherent liquidity», and develop strategies to reduce costs, without affecting the quality of projects and the final product, which can reduce the company unit prices.

He pointed out that the liberalization of liquidity also requires companies to agree with banks to finance the buyers of their units, after studying their situation, so that developers provide complete solutions to buyers.

Taha said that «the availability of liquidity for real estate companies is more important than achieving profits», explaining that «companies can dispense part of their profits in return for providing liquidity, and considered providing liquidity to the company is important so as not to postpone any of its operations».