Damac Sees Iran Investments Countering Dubai Property DipsSarmad Khan
Damac Properties Dubai Co. is optimistic that investment from Iran in Dubai property could offset a slowing market in the Middle East’s commercial and tourism hub.
Iran’s progress in negotiations with Western governments, including the U.S., could open doors for Iranians to invest in the emirate’s property market, Adil Taqi, group chief financial officer of the Dubai-based developer, said in an interview.
“I’m no politician, but I look at that development with a lot of optimism,” Taqi said. “Can you predict what’s going to happen? I certainly can’t. I can’t put a number to that.”
Iran agreed to a deal with the U.S and five other world powers in July that would curb the Islamic Republic’s nuclear program in return for easing economic sanctions. The measures haven’t yet been approved by the Iranian and U.S. legislatures.
Dubai, home to the world’s second-largest community of Iranians living abroad, has seen declining property values and slowing sales amid falling oil prices, weaker currencies in Europe and Russia and oversupply. Standard & Poor’s in July estimated home values may drop by as much as a fifth this year. Brokers CBRE Group and JLL Inc. saw a 10 percent decline.
“I’m not saying there isn’t enough raw data, but there isn’t enough intelligent information to be able to make such statements with such huge conviction,” Taqi said. “Quite frankly, I don’t see a slowdown.”
Dubai property prices had been gaining at the fastest pace in the world before a 2008 collapse caused property values to drop as much as 65 percent and pushed the Dubai to the brink of bankruptcy. After a rebound in the two years through 2014, residential transactions have fallen and prices have declined this year.
Damac, which is building Hollywood-themed apartment towers, a golf course designed by Tiger Woods and villas branded by New York mogul Donald Trump, Wednesday reported a 50 percent increase in first-half profit.
The shares jumped as much as 5.2 percent and were up 3.3 percent at 3.80 dirhams at 10:31 a.m. in Dubai, the highest value level since the company’s trading debut in January. Damac was the biggest gainer on the benchmark DFM General Index, which slid 0.5 percent.
The company may tap the debt market for a large transaction either through a bond sale or bank borrowing, the CFO said.
“I’m not ruling that out,” Taqi said, adding no banks are mandated yet. “We are open completely and you can do a bit of this and bit of that and you take the decision closer to the time.”
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