00:00Property developers in the UAE are raising billions through a growing arsenal of funding tools from Islamic bonds to private credits.
00:07This comes as they ride one of the country's longest real estate booms in years.
00:11For more, we're now joined by Laura Gardner-Questa.
00:14Laura, I was reading in the article that you put out this morning,
00:17data compiled by Bloomberg shows that dollar bond and Sukuk issuance alone has grown more than 12-fold from UAE property developers to $6 billion since 2021.
00:28Why is there being such a huge surge?
00:29So, like you said, they're tapping into a growing arsenal of tools, especially in the credit markets.
00:35One of the things they're doing with all these dollar bonds is buy land.
00:38There's an increasing race to secure prime locations in the UAE.
00:43As we know, property prices have been rallying since 2019.
00:47They're up 70 percent.
00:49And so they're really racing to buy this land and raise as much debt as...
00:53Yeah. Could it create some problems down the track?
00:55I mean, they're probably building a wall of maturities now across the curve.
00:59Yeah. So everyone that we spoke to about this topic seems pretty confident that there's no issues.
01:06They say, you know, the fundamentals are strong.
01:08Leverage is still low for many of these developers.
01:11Their profit margins are really high.
01:13Like some of these guys have like 40 percent plus profit margins.
01:17Cash collections are high.
01:18But you are right.
01:19There is a wall of maturity that is building from some unknown names as well, because we've seen a lot of debut issuers tap markets for the first time.
01:26And there's a wall of maturities that is building in years where we just simply don't know.
01:29But at the same time, it also taps into different types of investors, right?
01:33The typical investor who would buy a sukuk isn't necessarily the same investor that would buy your traditional bonds.
01:37Exactly. So a lot of the sessions has been sukuk and there are tapping private credit markets.
01:43So the investor base is growing.
01:44Some of them are also looking at IPOs, Bingati, Arada are one of the names.
01:50So they're really trying to maximize as much as.
01:53Yeah. How concerned are investors around the sustainability of this boom?
01:57I think you mentioned, you know, house prices are up, what property price up 70 percent.
02:01Yes, since 2019.
02:02Since 2019. Is there worry that this can is these types of levels of growth are no longer sustainable?
02:10I think, I mean, there have been reports this year saying, you know, there'll be like an oversupply hitting in the next few years.
02:17What the people that we spoke to at least say that often this gets delayed.
02:20So the numbers that you're expecting, like there's delays.
02:23Developers can also drip feed and delay the supply themselves.
02:27So they've been through this before they understand the market.
02:30So I think right now there isn't a concern.
02:32I mean, what might happen is that the pricing of this sukuk gets a bit more expensive or there's a bit of like fatigue.
02:38One of the analysts told us that like you've got like so many names from the same sector type of markets.
02:44But so far no one seems too concerned.
02:45So I think right now let's go.
02:55I think right now I think right now let's go to the next point.
03:00And I know.
03:01You guys know, we've got to rate it down.
03:02You guys know what?
03:04We've got to rate it down.
03:05But then we've got to rate it down.
03:06And then we'll get to rate it down.
03:07And then I think right now let's go to rate it down.
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