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Timing is everything: Emaar found that out the hard way

Every year, the world’s tallest building, Burj Khalifa, is host to the UAE’s most cherished celebrations: National Day.

Burj Khalifa will be draped in the UAE’s national colours on December 2, but Emaar Development, builders of the famed tower, are not so high on their recent fortunes in relation to what was the biggest IPO in a very long time in the GCC, and which will soon be overtaken by Adnoc’s $20bn share sale of a distribution subsidiary early 2018.

What happened exactly?


Bad timing

According to CNN money, shares in Emaar Development fell around 5 per cent one day after it started trading on the Dubai Financial Market (DFM) on November 22, following investors remaining restless over regional instability and its impact on real estate markets.

“Dubai’s biggest IPO in years raised $1.3 billion when the 800 million shares sold were priced on Nov. 2, then came the news of a surprise anti-corruption sweep in neighboring Saudi Arabia that included the arrests of dozens of princes, officials and high-profile businessmen, including global investor Prince Alwaleed bin Talal,” said CNN.

The news about the missile attacks from Yemen and turmoil in Lebanon wirth the resignation of Saad Hariri as prime minister (which he later reneged on) didn’t help much.

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“The developer’s parent company — Emaar Properties — has also seen its shares lose 5 per cent since the start of the month, despite strong earnings, reported CNN.

Emaar’s IPO managed to complete the sale even after almost $19bn was wiped out from exchanges across the six-member Gulf Cooperation Council countries, according to Bloomberg.

Emaar Development is behind the Burj Khalifa, as well as Dubai Marina and other properties in the United Arab Emirates.

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Shaken but not stirred

Emaar Properties reported third quarter net profit of $411 million, up 32 per cent from the same period last year, the company reported.

On the day of the listing of Emaar Development on DFM, state media agency WAM said the value of shares traded on UAE stock markets reported a one-month high of AED900 million ($245million), driven by the listing of Emaar Development, as well as the recovery of some blue chips.

Emaar Development was a top performer, attracting transactions worth $76m, which accounted for 36.6 per cent of total trading on DFM, closing high at AED5.77 – 4.3 per cent down from its pricing range of AED6.03.

In the meantime, Emaar Properties closed on a high note of AED7.80.

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Today, both share prices are still down, but Emaar development is recovering.

According to 4-traders, an online share index platform, Emaar development prices went up from AED5.77 on November 22 to AED5.8 on November 28, while reaching AED5.85 on November 27.

Emaar Properties fell from its high of AED7.8 to AED7.64 on November 28.

“Emaar Development has a clear strategy for growth, a strong sales backlog, high cash flows and targeted dividends of $1.7 billion to be paid over the next three years, indicating strong dividend yield,” Emaar Properties Chairman Mohamed Alabbar said in the statement.

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Strong performance

Emaar Properties said third-quarter net income increased 32 percent to 1.51 billion dirhams ($411m). The company said it has more than 24,000 developments under construction, and that it’s in a position to create strong cash flows in coming years. It had gross debt of 4 billion dirhams as of Nov. 13.

Emaar Hospitality Group, a subsidiary of Emaar Properties PJSC, has achieved a milestone of 10,000 hotel rooms across its 11 operational hotels and 30 upcoming projects. Of these, over 2,500 are operational at the Group’s 11 hotels in Dubai, while over 7,500 rooms are under development in the UAE, Saudi Arabia, Bahrain, Egypt, Turkey and the Maldives.

According to Mubasher, Ali Mohsen Al-Alaq governor of the Central Bank of Iraq unveiled recently an agreement with Emaar Properties to start work in 2018 on the new Al-Rasheed Residential City Project with total investments of $10 billion.