Emaar Properties

However, down on the ground Emaar Properties has been making strong progress, after a slow start, and a formidable build-out of property developments is now underway. Emaar has almost a monopoly on freehold property for sale in the emirate, though this will change over the next few years.

There has even been something of a gold rush by villa buyers in Dubai who have converged on sales events in hundreds and queued overnight to get the villa of their choice.

Most of Emaar's developments are in an area surrounding the Dubai Internet City, half way between Dubai and the Jebel Ali Free Zone. Six high-rise apartment blocks are under construction at the Dubai Marina, a 3.5km long artificial lagoon behind the main seafront with its many hotels. All these apartments were for sale off-plan and all of them have been sold.

Behind that, on the other side of the Sheikh Zayed highway, Emaar is building a luxury villa community at Emirates Hills. This site benefits from two champion level golf courses on either side, and numerous very large villas are being built on plots bought from Emaar.

Nearby is the middle-class housing area of The Lakes, a well landscaped settlement of villas to rent, which has served as a showcase development for the sale of hundreds of villas off-plan in the surrounding area. These sales are the ones that have attracted a gold rush, largely from Dubai expatriates who want to own their own home instead of paying rent.

Closer to the Sheikh Zayed highway is The Greens, an apartment complex that is selling out fast, with the happy aspect of a view over the Emirates Golf Course.

Cash flow is clearly rising at Emaar Properties. Deposits alone on apartments and villas scheduled for completion next year must be considerable. Next year will clearly be something of a bumper year for the property developer, which is approaching the peak of its cash flow cycle identified by a HSBC research document as long ago as February 2001.

Indeed cash flow in 2003 and 2004 will be very strong. For Emaar is somewhat ahead of itself, and has been quick to bring developments forward to satisfy a surge in demand for off-plan villas and apartment sales.

By building to order, Emaar is not likely to ever face the problem of unsold properties lying empty. And the company still has so much cash left over from its IPO that it is starting a new bank this autumn. Housing finance has also been another early, and very practical, diversification.

With all this in Emaar Properties' favor, its stagnant share price remains an enigma. Perhaps too many investors had their fingers burnt after the IPO. But with cash flow now surging ahead, and a huge discount to net assets, Emaar's share price will surely soon move as fast as its apartments and villas.