The lifts in Burj Khalifa, developed by Emaar Properties as the tallest tower in the world, may have stalled but the company's shares are certainly on the rise. Emaar shares rose 5 per cent yesterday to Dh3.81. In the past three weeks, Emaar has risen more than 30 per cent - and with strong volumes. The catalyst, analysts say, is not so much company fundamentals as a shift in investor outlook towards Dubai in general.
When the financial crisis hit Dubai's property sector in late 2008, and job cuts ensued, a mass exodus of expatriate workers was expected. As the country's largest developer, Emaar was expected to take a major blow and the stock plunged as a result. Instead, Dubai's population grew to 1.77 million, up 7.6 per cent in the past year, the Government announced on Monday. The surge is due to an "overspill" of people from emirates such as Sharjah and Abu Dhabi, who have moved to Dubai to capitalise on cheaper rents.
Majed Azzam, a property analyst at Al Futtaim HC Securities, said the population rise was supported by other data suggesting the number of mobile phone subscribers rose last year, as did water and electricity consumption. "If you look at the supporting evidence in Dubai, it is likely that population did grow; this is good for the real estate sector," he said. Mr Azzam said the stabilisation of rental prices since November and a strong gain last month were indications that there was still considerable property demand.
In addition, Emaar has benefited from the speculation in recent weeks that Dubai World's proposed debt restructuring will be resolved soon, and in a fashion that does not create major ripple effects through the emirate's economy. The latest contribution to that growing perception was a report in The National yesterday that Dubai World representatives had put forward an informal plan to creditors that included flexible repayment options regarding its US$26 billion restructuring. This was received by investors as good news for Dubai.
And as Dubai goes, so goes Emaar. @Email:firstname.lastname@example.org