Emaar Properties PJSC rose to the highest level since the beginning of Dubai’s real-estate crash more than four years ago amid bets profit at the developer of the world’s tallest tower will benefit from a property recovery.
The stock soared 5.7 percent to 5.01 dirhams, the highest level since November 2008, at the close in Dubai. That’s the strongest since the start of one of the world’s worst property crashes in Dubai, which sent prices plunging more than 65 percent. About 46 million shares were traded, more than three times the three-month daily average. The stock’s price estimate was raised to 6 dirhams at HSBC Holdings Plc last week.
“New projects that Emaar is launching and the successful sales that they are hitting will create further value when these projects are finished,” according to Yazan Abdeen, who helps oversee about $300 million as ING Investment Management’s Middle East and North Africa fund manager in Dubai. “The first quarter will be expected to be even more solid as far as recurring income is concerned” given the economic recovery, he said.
Emaar surged 30 percent in January, the best start of a year since the company went public in 2000, according to data compiled by Bloomberg. Last month, the developer sold out all units offered as part of a luxury hotel development in Dubai.
Dubai is returning to large projects that dominated the market before the crash after the city’s economy expanded 5 percent in 2012, the fastest pace in five years, according to government estimates. The emirate last year announced plans to develop the world’s largest mall, 100 hotels and gardens larger than London’s Hyde Park, which Emaar will co-develop.
The “Dubai rebound is real,” HSBC said in a note last week, maintaining its overweight recommendation on the stock. “We expect Emaar to continue performing well on the back of strong Dubai real estate launches.”
Full-year profit at the developer, which derived 50 percent of revenue from its hospitality and retail business in 2012, may advance 9 percent, according to the mean estimate of 11 analysts on Bloomberg. Emaar, which also operates in China, India, Pakistan and Syria, derived 15 percent of sales from outside of the U.A.E. last year.
The developer’s 14-day relative strength index surged to 78 today from 70 at the close last week. A reading above 70 indicates to some analysts that a security is poised to drop. Twelve analysts recommend investors buy the shares while three say hold, according to data compiled by Bloomberg.
Emaar led a gain of 2.2 percent in the benchmark DFM General Index today and was the second most-traded stock in the Persian Gulf as of 3:09 p.m. in Dubai.