Wednesday, Jul 25, 2012
--Cites strong investor response to Emaar's launch of new developments
--Emaar plans to announce further funding strategies in due course, executive says
--Says successful sukuk issue reflects investor confidence
--Analysts say growth seen mostly in select, prime areas
By Tahani Karrar-Lewsley
Of ZAWYA DOW JONES
DUBAI (Zawya Dow Jones)--Despite the continuing supply glut putting downward pressure on prices and mixed analysts views on the health of the emirate's real estate market, Dubai-based master developer Emaar Properties (EMAAR.DFM) believes Dubai's property sector is now on a "growth track."
"Dubai's property sector is on a growth track, which was underlined by the overwhelming investor response to the launch of our Panorama at The Views, with the entire lot sold on the very first day of launch," an Emaar spokesperson said in an emailed statement to Zawya Dow Jones late Tuesday.
"Emaar recorded strong customer response to the launch of town houses in Arabian Ranches too, underlining the increasing customer confidence in Dubai's property market," the Emaar spokesperson, who declined to be named, added.
Dubai's once thriving real estate sector has seen prices and rents slump since late 2008 when the global economic downturn first took hold. Despite sparse evidence that Dubai's primary market has since stabilised and witnessed some signs of growth, analysts expect property prices to soften further in 2012 as more supply comes online, regional political instability continues and the European debt crisis deepens.
Real estate consultancy firm Jones Lang LaSalle notes in its latest market report that about 24,000 additional residential units are scheduled to be delivered in the second half of 2012. This is after approximately 3,000 residential units were added to the Dubai market in the second quarter of 2012, bringing the total current residential stock to around 344,000 units, JLL adds.
"Dubai is on a selective growth track, some parts are growing--like in prime areas--but it's too early to say the whole market is growing and whether this growth is sustainable given the ongoing supply," said Craig Plumb, an analyst at JLL.
Analysts at CBRE also stressed the current divergence between established luxury communities and non-luxury communities in Dubai.
"Emaar is established in building high-profile communities such as Downtown Dubai but other not so established communities like Dubai Sports City are still seeing price declines in sales and rentals and will continue to this year," said CBRE analyst, Matthew Green.
The Emaar spokesperson also said after the successful issuance of its $500 million sukuk in July, at the reduced coupon rate of 6.4% compared to 8.5% in its previous issuance, the company plans to announce "further funding strategies in due course based on the market conditions and our financial requirements". According to analysts the July sukuk was nearly ten times oversubscribed.
"The timing of the sukuk issuance was decided based on the recent contraction of yields on Emaar's 2016 sukuk, which enabled the company to issue long-term debt to repay current higher priced shorter term debt," the executive said.
The success of the issuance reflects the confidence investors have in Emaar's long-term strategy and its ability to implement it, the executive said.
Emaar shares are trading +0.3% at AED3.22 Wednesday.
-By Tahani Karrar-Lewsley, Dow Jones Newswires; +971-4-446-1686; tahani.karrar@dowjones.com; Twitter: @tahanikarrar
Copyright (c) 2012 Dow Jones & Co.
(END) Dow Jones Newswires
25-07-12 0800GMT
