Emaar Shares Rally as Sales Signal Property Rebound: Dubai Mover

Emaar Properties PJSC shares jumped to the highest close in more than three years as apartment sales of the developer of the world’s tallest skyscraper picked up amid a recovery in Dubai.

Shares of the company with the heaviest weighting on Dubai’s index rose 1.5 percent to 4.88 dirhams, the strongest close since October 2009. The stock was the biggest gainer on Dubai’s DFM General Index today, which advanced 1.1 percent to 1,874.02, the highest since March 2010.

Emaar has rallied 8.9 percent since the company said Jan. 27 that a luxury hotel project in central Dubai sold out all units available in the first offering. The stock is set to rise above 5 dirhams, according to Waleed Al Khateeb, senior finance manager at Daman Securities LLC. That would take it to the highest level since the beginning of a real estate crash in Dubai that sent property prices plunging more than 65 percent.

“Sentiment for the real estate sector has been strong and long-term investors have taken an interest in Emaar again, especially given its earnings prospects and fundamentals,” said Dubai-based Al Khateeb. “Investors expect the recovery to continue as new projects are announced.” Daman is the ninth biggest-brokerage in the United Arab Emirates, according to Dubai bourse data.

Apartment Sales

Emaar has benefited from an increase in home prices in some parts of Dubai, with its apartment sales more than doubling in the third quarter. The developer is set to post a 16 percent increase in 2012 profit, according to the average estimate of 11 analysts compiled by Bloomberg.

Dubai is returning to large projects that dominated the market before the crash after the emirate’s economy expanded 5 percent in 2012, the fastest pace since 2007, according to government estimates. In November, the city announced plans to develop a new district with the world’s largest mall, 100 hotels and gardens larger than London’s Hyde Park, which Emaar will co-develop. The sheikhdom also plans to build five theme parks for $2.7 billion.

The property industry will probably witness “a broader-base recovery” this year, even as central bank restrictions on mortgage lending and higher supply potentially slow price increases, according to Jones Lang LaSalle.

Mortgage caps on expatriate home buyers will drive out speculators and support Emaar in the long run, Al Khateeb said. Foreigners make up more than 80 percent of the U.A.E. population, according to government estimates. Dubai first allowed expatriates to own property in 2002, sparking a real estate boom that spurred Emaar’s share price to as high as 28.7 dirhams in September 2005.

The company’s 14-day relative strength index rose to 87 today. A reading above 70 indicates to some analysts that a security is poised to drop. Twelve analysts recommend investors buy Emaar shares, while three say to hold them, according to data compiled by Bloomberg.