HSBC Says Dubai Property Recovery to Spur 27% Surge for Emaar

Dubai’s economic and real estate recovery will probably boost Emaar Properties PJSC’s share price by 27 percent to the highest since 2008 as apartment sales pick up amid increasing demand, HSBC Holdings Plc said.

The “Dubai rebound is real,” HSBC said in the note, maintaining its overweight recommendation on the stock. “We expect Emaar to continue performing well on the back of strong Dubai real estate launches.”

Shares of Emaar, developer of the world’s tallest tower, will probably gain to 6 dirhams, HSBC said in an e-mailed note, revising its 4.80 dirham price estimate. Such an advance in the shares, which closed at 4.74 today, would take Emaar to its highest level since October 2008, the beginning of a real estate crash in Dubai that sent prices plunging more than 65 percent.

The developer’s shares surged 30 percent in January, the best start of a year since the company went public in 2000, according to data compiled by Bloomberg. Emaar said Jan. 31 full-year profit advanced 18 percent after it sold more than 80 percent of projects available in 2012. Last month, it sold out all units offered as part of a luxury hotel development in central Dubai.

Mall, Gardens

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. It also plans to build five theme parks for $2.7 billion.

The property industry will probably witness “a broader-base recovery” this year, according to Jones Lang LaSalle. 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 is poised to post a 9 percent advance in 2013 profit, according to the mean estimate of 11 analysts on Bloomberg.

Emaar’s 14-day relative strength index slipped to 70 from 72 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 hold them, according to data compiled by Bloomberg.