Dubai: Emaar Properties, the Dubai-based real estate developer, said there would be no material impact on the company as a result of the fire at one of its hotels on New Year’s Eve.
Emaar also announced it has appointed Dutco Group as the contractor for undertaking the clearing, assessment, and restoration work of The Address Downtown Dubai hotel, with plans to reopen the hotel “in record time.”
In a statement issued on Sunday morning to the Dubai Financial Market (DFM) where Emaar is listed, the company said the "has been contained and the cause is being investigated by the company and the relevant authorities".
"The building and risk of fire are covered by insurance, so there should be no material impact on the company as a result of this incident.”
Emaar also told Gulf News that the coverage includes “insurance for the financial impact from business interruptions.”
Despite the statement, Emaar’s shares saw a lot of selling activity especially in early trade. Prices fell as much as 4.4 per cent to reach a low of Dh5.44 in the first few minutes of trade.
The company accounted for 45 per cent of the total trade value on DFM, but share prices managed to bounce back slightly during the day to end trade 1.58 per cent lower at Dh5.6.
Saleem Khokhar, head of fund management at the National Bank of Abu Dhabi’s asset management group, said that he did not expect to see much of an impact on Emaar Properties but rather on Emaar Hospitality Group, which manages hotels.
Emaar Hospitality is not a listed company.
“You’ve got to look a little beyond that at the impact on sentiment. Emaar is building quite a lot of Address hotels, and there are people getting concerned about properties like this in terms of health and safety, so that’s where the real issue comes in – it’s more about sentiment rather than monetary impact for the group as a whole,” he said.
Sentiment across the UAE’s equity markets has already been negative for much of the past year, primarily on the back of lower oil prices. Such sentiment has translated to significantly low liquidity in the markets.
Khokhar said he did not expect sentiment to remain negative for Emaar, however.
“If you look at the underlying fundamentals for Emaar as a group, they’re actually not that bad. When you look at the valuations, the recurring revenues, and the upside potential for a two-year view, we see a really good upside of about 40-50 per cent. The problem is you need some catalysts to unlock that…and I think it will be some time before we see that coming through,” he said.
Khokhar added that investors were still waiting for clarification from Emaar on why the fire started in the first place, why it spread so quickly across the property, and what the company is doing to avoid similar incidents in the future.
Emaar Malls, which operates the company’s flag ship The Dubai Mall and is another subsidiary of Emaar Properties, edged down on Sunday 0.36 per cent to reach Dh2.75.
As for the DFM index, it ended the day 0.51 per cent lower, after managing to recover from the plunge in early trade.
On Thursday evening as thousands gathered to watch fireworks and celebrate New Year’s Eve near Dubai’s Burj Khalifa, a fire ravaged The Address Downtown Dubai hotel, which is owned by Emaar Properties and located near Burj Khalifa.
Around 15 people were injured, with the hotel now closed indefinitely. No casualties were reported.
Emaar said on Sunday that a team of consultants has already been mobilized by Dutco Group and are now on site. Cleaning work has started, with the mechanical, electrical, and structural assessment of the building and restoration also underway. Construction will commence afterwards.
