The Dubai Financial Market (DFM) is making gains driven by the real estate and construction sectors. On 13 November, the DFM Index gained 0.7 per cent after investor sentiment was boosted by construction company Drake and Scull International’s (DSI) third-quarter results.

The reaction for DSI was positive and its stocks moved up almost 2 per cent and, on the back of that, stocks of Arabtec Holding, which announced lower than expected results, increased by 3.7 per cent. Dubai developer Emaar’s stocks also rose 0.4 per cent to 2.67. Whether this momentum is sustainable remains to be seen.

Arabtec is still struggling with legacy issues, the projects it currently has in the UAE are not moving much and have become loss-making. Its stocks have fallen 11.8 per cent since the beginning of the year.

“They are making losses in existing Dubai backload from the past two to three years, which is hurting the bottom line,” says Nishit Lakhotia, senior analyst at Bahrain-based Securities & Investment Company (Sico).

“Overall, there is not much pick-up in demand in the UAE retail sector. Dubai is still trying to come out of the real-estate crisis it is in and it will take another few years to get out of this mess,” says Lakhotia.

New projects in the UAE are still limited. Competition is high in a market with fewer projects. Many of the UAE construction companies are diversifying and expanding outside the country, heading primarily toward Saudi Arabia.

“Overall the results have been positive, but that has more to do with the projects outside of the UAE, which has kicked through to revenues,” says Lakhotia.