Emaar reigns as top choice for investors

[Lahore_Real_Estate]

Global diversity and high quality cited as reasons

by Gaurav Ghose, Financial Features Editor
Published: 00:00 December 19, 2009

Mobius, the executive chairman of Templeton Asset Management, says the real estate developer stands out not only because of its land bank in Dubai, but also its properties that are now nearing completion are all prime property.Image Credit: Supplied

Dubai : Emaar Properties, the Dubai-based developer, was the only company Mark Mobius willingly talked about. As an investor in the company, he sounded bullish about it's future and had his reasons for that.

In fact, last week, Deutsche Bank and Credit Suisse also praised Emaar on the back of its decision not to merge with Dubai Holding's real estate subsidiaries.

The decision was welcomed by the local markets with Emaar, seen as a bellwether stock, rallying 15 per cent on December 10. The stock had crashed about 13 per cent earlier in the week. Emaar closed at Dh3.95 on Thursday.

Both international banks said that the Dubai-based developer with minimum exposure to Dubai and thousands of international units almost ready to be handed over is in a strong financial position.

It's debt situation is not much of a concern since it has sufficient cash flow to pay off short term debt maturities.

Mobius, the executive chairman of Templeton Asset Management, says the real estate developer stands out not only because of its land bank in Dubai, but also its properties that are now nearing completion are all prime property.

Prerequisites

"If we are able to buy into Emaar at a reasonable price from a longer term point of view it should turn out fine," he said.

And one of the things that Mobius points out, that's quite a contrast with other parts of the Middle East and many parts of the world, is the high quality maintenance and management of prime properties.

"That's very critical. One of the things that we have seen in China, and in many other parts of the world, and even in Saudi Arabia, [is that] maintenance is terrible. A brand new property in five years turns into a dump.

"The degree to which Emaar and other property companies in Dubai can keep the levels high means that the value really will be enhanced going forward."

Favourable reasons

Emaar's global diversification is another reason that makes Mobius favour it.

The developer building the world's tallest tower, Burj Dubai, is about to hand over more than 2,100 units in several countries, including Syria, Morocco, Pakistan and Egypt.

In fact he seems most animated by the sheer scale of its project in Saudi Arabia.

"In some cases, it's really the blue sky like the Economic City that they are planning in Jeddah," he says.

"That's a huge project that they are building—it's the size of Manhattan, I believe, the land area. That's not going to bear results overnight, but it provides an incredible platform going forward for the company.