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The impact of financial crisis on UAE real estate and construction sector: analysis and implications

The impact of financial crisis on UAE real estate and construction sector: analysis and implications Purpose – The purpose of this paper is to analyze the performance of real estate and construction companies in the United Arab Emirates (UAE) during the pre (2006‐2007) and post (2008‐2009) global financial crisis periods. Design/methodology/approach – A ratio analysis was conducted on a sample of six companies in the real estate and construction sector. A nonparametric test, namely the Wilcoxon matched‐pairs signed rank test, was employed to see whether the calculated ratios differ between the pre‐crisis and post‐crisis periods. Findings – The findings reveal a negative impact of the business cycle on the performance of real estate companies in the UAE. There is a significant fall in the liquidity, profitability, leverage and activity ratios after the financial crisis. Research limitations/implications – The limitations of the study revolve around factors such as limited sample size, non‐availability of data for the aforesaid periods, low transparency in revealing some financial details and non‐availability of yearly industry averages. Practical implications – The companies in this sector could be obligated to ensure better transparency in revealing financial information to the public. Implementation of stringent regulatory policies in the real estate sector will help the unprecedented downturn in these companies. Originality/value – This is the first empirical study conducted to examine the impact of the global financial crisis on the performance of the real estate and construction companies in the UAE. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Humanomics Emerald Publishing

The impact of financial crisis on UAE real estate and construction sector: analysis and implications

Husam‐Aldin N. Al‐Malkawi; Rekha Pillai
Humanomics , Volume 29 (2): 21 – May 17, 2013
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References (63)

Publisher
Emerald Publishing
Copyright
Copyright © 2013 Emerald Group Publishing Limited. All rights reserved.
ISSN
0828-8666
DOI
10.1108/08288661311319184
Publisher site
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Abstract

Purpose – The purpose of this paper is to analyze the performance of real estate and construction companies in the United Arab Emirates (UAE) during the pre (2006‐2007) and post (2008‐2009) global financial crisis periods. Design/methodology/approach – A ratio analysis was conducted on a sample of six companies in the real estate and construction sector. A nonparametric test, namely the Wilcoxon matched‐pairs signed rank test, was employed to see whether the calculated ratios differ between the pre‐crisis and post‐crisis periods. Findings – The findings reveal a negative impact of the business cycle on the performance of real estate companies in the UAE. There is a significant fall in the liquidity, profitability, leverage and activity ratios after the financial crisis. Research limitations/implications – The limitations of the study revolve around factors such as limited sample size, non‐availability of data for the aforesaid periods, low transparency in revealing some financial details and non‐availability of yearly industry averages. Practical implications – The companies in this sector could be obligated to ensure better transparency in revealing financial information to the public. Implementation of stringent regulatory policies in the real estate sector will help the unprecedented downturn in these companies. Originality/value – This is the first empirical study conducted to examine the impact of the global financial crisis on the performance of the real estate and construction companies in the UAE.

Journal

Humanomics – Emerald Publishing

Published: May 17, 2013

Keywords: United Arab Emirates; Construction industry; Real estate; Financial crisis; Ratio analysis; Wilcoxon test; Profit; Liquidity

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