Emaar outlook whets investors' appetites

Investors are starting to look closely at Emaar Properties as the best option in a region where a lack of clarity still prevails in the property market. The company's shares closed at Dh3.81 yesterday, down 1 per cent. But that drop has put Emaar back on the radar of foreign and local institutions, which are now seeking to buy shares at a discount, said Alfred Fayek, the managing director of equity sales at EFG-Hermes Brokerage in Dubai.

But Emaar's price was not just a trading opportunity, said Mr Fayek, who suggested that holding on to the stock for the medium term could be worthwhile because the company had expanded outside traditional off-plan property in Dubai into hotels, malls and regional property markets. Meanwhile, house prices in Dubai seem to be stabilising at 2007 levels, according to research released yesterday by the property market analyst Colliers. Prices rose 2 per cent to about Dh1,061 a square foot in the first quarter of the year, Colliers said. But that did not necessarily mean the bottom of the market had been reached.

"Despite the stability that the market appears to have achieved, a number of concerns remain," said Ian Albert, the regional director at Colliers. "There will be significant oversupply in the market by the end of the year so it is anticipated the index will experience fluctuations in value going forward. What will be important to watch is how much of that supply matches the end-user demand for community-oriented developments."

While property developers across the Emirates had a difficult first quarter, Emaar's net income rose to Dh760m from Dh421m in the same quarter last year on recurring income from its malls and hotels. Chet Riley, an analyst at Nomura Securities, said in a note in April that he recommended investors buy Emaar because it was "the largest and most liquid [company] in the real estate index with comfortable gearing levels, recurring income streams and conservative asset valuations". Mr Riley's price target for the stock was Dh5.61.