Property firms build market's strength

Regional stock markets rose today, lifted by property developers and construction companies. Arabtec, the company building the Burj Dubai, was one of the biggest risers, and nearly reached the maximum limit of a 15 per cent gain allowed by exchange rules. The Dubai Financial Market (DFM) climbed 3.03 per cent, its third consecutive day of gains, to 1,928.94. The Abu Dhabi Securities Exchange (ADX) also rose today, by 1.31 per cent, reaching 2,720.84. The Kuwait Stock Exchange posted a gain of 1.31 per cent, with Bahrain and Qatar also ending in positive territory. Both the Saudi Tadawul and Muscat markets were closed.

UAE markets will be shut on Tuesday for National Day. Ali Khan, executive director at Dubai-based Arqaam Capital, said the belated GCC-wide rise was inevitable after a week of local and international good news. However, Mr Khan pointed out that the rises were based on low trading volumes. Arabtec Holding climbed 14.95 per cent, while Emaar properties, the Middle East's largest property developer, rose 9.77 per cent today. Sorouh Real Estate gained 5.3 per cent, and both RAK Properties and Aldar Properties climbed more than 3 per cent. In Kuwait, the largest gainer was National Bank of Kuwait, the country's biggest lender.

Mr Khan said it was significant that Arabtec's foreign ownership, at 47 per cent, was two percentage points away from the maximum allowed. "I think traders now realise that previously Arabtec was oversold and it is for everyone to see the foreign investors there." On Wednesday, Dubai Holding Commercial Operations Group said it repaid Dh2.4 billion (US$653 million) in eurobonds and bank loans, in a further sign that Dubai-based companies are paying off their debts. Analysts have expressed concern in recent weeks that Dubai's large companies may have difficulty rolling over large amounts of debt coming due in the next few months because of the global credit shortage.

Today's stock gains followed news earlier this week that the country's two largest home lenders, Tamweel and Amlak Finance, are entering a government-backed merger with Real Estate Bank and Emirates Industrial Bank, both of which are controlled by the Government. The new entity will be called Emirates Development Bank. Mr Khan said the concerted efforts by the government to consolidate the real estate industry had given the market a shot in the arm.

In another positive for the real estate market, a new mortgage lender called Abu Dhabi Finance appeared on Wednesday, reporting Dh500m in initial capital and support from Abu Dhabi Commercial Bank, Aldar, Mubadala, Sorouh Real Estate and the Tourism Development & Investment Company. * with reporting by Andrew Foxwell [e-mail]