Emaar Properties, the developer of Dubai’s Burj Khalifa, and Aldar Properties in Abu Dhabi, have gained this year as better-than-expected results and appealing dividends attracted investors. Damac Properties, on the other hand, has extended its declines with more outflows on the radar.

U.A.E. real estate stocks have been battered in the past two years amid increasing supply and faltering demand as lower oil prices hurt economies across the Gulf. Dubai residential prices have dropped about 25 percent from a peak in 2014, according to Craig Plumb, head of Middle East research at broker Jones Lang LaSalle. He estimates a contraction in the single digits this year.

Conditions Remain Difficult for UAE Real Estate Developers

Emaar Properties and Aldar have entities tied to the local government as their main shareholders. Both have “succeeded in generating growth at the bottom of the cycle,” said Selima Mrabet, a financial analyst at Tunis-based equities research firm AlphaMena, warning that conditions are likely to remain difficult this year. “This move can only be sustained if it will be fueled by good news. The market needs to restore confidence in the real estate sector.”

Read more on why Mark Mobius says not to buy Dubai Property before “real slump”

Different Scenario

Damac’s shares have declined 56 percent in the past 12 months and in February the company posted its lowest annual profit since going public in 2013. The stock could be excluded from MSCI Inc.’s main benchmarks in a review next month as it fails to meet technical requirements, according to Mohamad Al Hajj, an equities strategist at EFG-Hermes in Dubai. That could trigger further outflows, he said.

The company’s head of investor relations, Amr Aboushaban, said in an email that many of its future developments in Dubai have already been sold and that it’s “noting indications of market stabilization.”

Damac is going through a “difficult journey” as its business model isn’t as flexible as its Dubai competitors because it only offers luxury developments, said Alphamena’s Mrabet. Oversupply and fierce competition will drop those who didn’t implement effective and efficient strategies “out of the race.”