Emaar represents the model of good value

Property developer best example of the general rule in UAE

The news this week that Dubai Holding Commercial Operations Group lost Dh23.56 billion (US$6.41bn) last year pushed down the shares of other UAE developers. But while challenges remain, UAE property companies are inexpensive compared with their peers globally and none represents better value than the industry bellwether Emaar Properties, Deutsche Bank said yesterday.

"Emaar is the least sensitive to further impairments, in our view, reflecting better asset quality and conservative accounting," the Dubai-based Deutsche Bank analysts Nabil Ahmed and Athmane Benzerroug wrote in a report. The bank also lauded Emaar because of its well-diversified asset base. "Hotels, malls and rental portfolios are already a decisive part of its real estate assets," the analysts said. "It is the most mature real estate player in that sense."

With Dh10.6bn worth of property overseas, Emaar's expansion abroad has also paid off in reducing its exposure to Dubai, where prices remain depressed. "We believe Emaar is increasingly a MENA [region] real estate play rather than a pure Dubai developer," the analysts wrote. Emaar said in 2008 that it expected 70 per cent of its yearly revenues to come from overseas projects by this year. The company issued construction contracts for projects in Egypt, Jordan and Saudi Arabia in the first quarter of the year and has said India was also an integral part of its plans.

Looking further ahead, Emaar could get a boost from its involvement in King Abdullah Economic City (KAEC), the largest city under construction in Saudi Arabia. It was announced yesterday that the city would welcome foreign buyers. The project will have little immediate effect on Emaar's revenues but it should help to shore-up income from the kingdom in the future. KAEC is in the early stages of construction with about 10 per cent completed so far.

"We're starting to see the same transformation in Saudi that happened in the UAE," said Majed Azzam, a property analyst at Al Futtaim HC Securities, although he agreed the impact may not be felt for years. Emaar finished yesterday down 0.6 per cent, to Dh3.20. [e-mail]