Shares rallied yesterday as investors welcomed a Dh330 billion (US$89.84bn) spending plan for Abu Dhabi, with property stocks rising sharply on news of new homes, schools and roads.
"The real estate names are moving," said Sebastien Henin, a portfolio manager at The National Investor, an investment company in Abu Dhabi. "We have got a stream of positive news flow from the Abu Dhabi emirate lately. First it was the merger of Aldar Properties and Sorouh Real Estate, then the awarding of the Louvre contract and now all these projects. The mood is good."
The Abu Dhabi Government is planning projects including Emirati housing, schools, roads and tunnels, and sewerage systems over the next five years. The development gave a boost to property firms, whose shares make up the bulk of trading on the local markets.
"If you're projecting a positive well thought out growth strategy and milestones to get there, it is going to bring employment and diversify the economy away from oil and gas," said Saleem Khokhar, the head of equities at National Bank of Abu Dhabi.
Shares in Aldar, which developed Yas Island and Ferrari World, yesterday advanced to the highest level since April 2011. The shares rose 4.5 per cent to close at Dh1.62, having jumped by as much as 7.1 per cent in early trading.
Sorouh, which developed Reem Island's Sun & Sky Towers, rose to the highest level in two years. The shares gained 3.2 per cent to Dh1.60, having jumped by as much as 5.1 per cent earlier yesterday.
RAK Properties, another Abu Dhabi-listed developer, gained 2.3 per cent to 43 fils. RAK's shares jumped 4.7 per cent early in the day.
Between them the three property firms traded 126 million shares, compared with a total of 184.8 million shares for the broader market.
The Abu Dhabi Securities Exchange General Index yesterday rose by 0.8 per cent. It closed at 2,766.29 points today yesterday.
The Dubai contractor Arabtec Holding, in which the Abu Dhabi state Government-controlled fund Aabar Investments holds a 53 per cent stake, jumped 2.6 per cent at the open but pared gains through the session. It ended flat at Dh2.65.
Arabtec last week won a Dh2.4bn billion contract to build the Louvre, the latest of a series of contracts awarded in the capital.