Construction growth rates in the UAE are likely to fall to 15 per cent in 2009 from 20 per cent in 2008 due to global financial woes, an investment bank said in a report.

Construction growth rates in the UAE federation, which includes Abu Dhabi and regional trade and tourism hub Dubai, are likely to slow to 13 per cent in 2010, Al Mal Capital said in the report released on Tuesday.

It said the country could see a cement oversupply at the end of 2010.

"We have an overall negative view on the cement sector due to the slowdown of the construction industry, coupled with extensive expansion of clinker and cement capacity in the market," it said.

Clinker is the raw material necessary to produce cement.

"Developers may find it increasingly difficult to fund projects and there could be an increasing number of projects being delayed or postponed," it added.

Al Mal said it expected cement companies exposed to regional equities to write down significant losses on the back of falling markets in the Gulf region over the last three months.

Of the five cement companies covered in the report, Gulf Cement Co and RAK Cement were graded 'market perform' while Union Cement, Arkan Building Materials and National Cement were marked as 'under perform'.

"Within our sector, we feel that the share prices of RAK Cement and Gulf Cement have found a bottom, but still the upsides are limited at 2-3 percent to our 12 month target prices."    

The remaining stocks could be affected going forward by the market turmoil, the report said.

Dubai's real estate sector has been hit hard recently as shares tumble, real estate prices fall, construction projects are scaled back and jobs are cut.

Mohamed Alabbar, a Dubai government official and chairman of Emaar Properties, said on Monday the emirate will pull back on its building spree in light of the financial crisis. - Reuters