Emaar Shares Raised 68% at EFG-Hermes as Dubai Boom Returns

EFG-Hermes Holding SAE increased its share-price estimate for Emaar Properties PJSC (EMAAR), the builder of the world’s tallest skyscraper, by 68 percent.

The Cairo-based investment bank raised the shares to buy from neutral and lifted the price forecast to 10.1 dirhams from 6 dirhams. The shares traded at 7.9 dirhams in Dubai today. EFG-Hermes has the third-highest price estimate for Emaar after Arqaam Capital Ltd.’s 12 dirhams and Aljazira Capital Co.’s 10.85 dirhams, according to data compiled by Bloomberg.

“Our bullish stance is underpinned by the MSCI inclusion and exuberance around Expo 2020,” analysts Jan Pawel Hasman and Kareem Ghaly wrote in a research note today. “Emaar represents a pure exposure for many investors who want to play these two themes and the increase in liquidity is supporting asset price appreciation.”

Property companies in Dubai are benefiting from an economic recovery and a rebound in construction as the Persian Gulf business hub prepares to host the World Expo in 2020 with spending of $8 billion on infrastructure projects. Dubai’s benchmark stock index more than doubled last year as MSCI Inc. promoted the United Arab Emirates, a federation of seven sheikhdoms including the capital Abu Dhabi and Dubai, to emerging-market status. The emirate had one the worst real-estate crashes during the global financial crisis as speculators fled.

Emaar, which this month appointed Abdulla Lahej as group chief executive officer replacing Low Ping, has been rolling out new developments in Dubai as property demand climbs. The company plans to start the sale of Spanish-style villas next month.

Chairman Mohamed Alabbar said in November that the “current environment” makes it a good time for the developer to consider spinning off its retail business into a separate company to increase investor returns. EFG-Hermes said it valued the retail arm at about 31 billion dirhams ($8.4 billion).

Emaar’s 2013 profit may climb 13 percent to 2.39 billion dirhams, according to the mean estimate of 12 analysts compiled by Bloomberg.

To contact the reporter on this story: Shaji Mathew in Dubai at shajimathew@bloomberg.net

To contact the editor responsible for this story: Claudia Maedler at cmaedler@bloomberg.net

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