Property prices in the UAE will likely drop by another 15% (adding to the 25% decrease in the fourth quarter of 2008), according to a report issued by Nomura Securities, an investment bank. “The property sector is maturing at breakneck speed and a shakeout will see more casualties, with this year marked by consolidation as companies struggle to stay afloat,” noted one analyst.

That said, Nomura gave the region’s top property developer, Emaar Properties, a “buy” rating, with a target price of Dh2.87. “Emaar is the largest and most liquid company under our coverage and benefits from strong government support,” the report said, adding that Emaar is now entering the second stage of its maturity cycle, and expects to derive 12 -15 % of its net profits from recurring income streams. Furthermore, Emaar has low net debt gearing and no apparent imminent refinancing issues.

Other Nomura calls on UAE property names:

Deyaar Development and Union Properties (Dubai) – Reduce

Sorouh Real Estate and Aldar Properties (Abu Dhabi) – Neutral

RAK Properties (Ras Al Khaimah) – Neutral

Nomura did write, however, that “the prospects of a [proposed government-directed merger] with Deyaar may be a cause for re-rating Union Properties, with cash liquidity still a core issue for the latter.”