Emaar shares continue to fall

Despite the series of market boosting announcements as well as a record half year net profit posted by the company during last week, Emaar Properties share price on Dubai Financial Market (DFM) kept falling during the last three days.

The share price which was ruling above Dh24 a few days ago has fallen to Dh22.60 as of yesterday. Though several reasons are being floated around for this phenomenon, market experts prefer to fix the blame on the huge capital which runs into Dh2.65 billion, which in turn, has toned down the earnings per share (EPS).

However, market observers are optimistic of the future of Emaar performance in the market.

"This is a trader share and hence very sensitive too. Maybe, there are shareholders who doubt about the efficiency of the company to fulfill all its projects." Mustafa Farid Mustafa, senior portfolio manager, Al Daman Securities said.

He is confident that the general perception would reverse once the company comes out with the annual financial statements for the current year. Currently, the share is being traded at a P/E ratio of 17.5 which is way above the market average of 15.

"But if the company is able to sustain the trend in its performance through the year, Emaar will end up the year with a P/E of 13 even at a market price of 25," Mustafa added. Several shareholders believe the company would hike the dividend to 10 per cent for the current year.

It was early this year, the company initiated moves to prop up the share price which was being traded at a substantial discount to its book value - said to be above Dh65.

"One cannot attribute a particular book value to a company like Emaar where the underlying property price can't be calculated precisely. This might have gone down since it has been calculated," head of another leading brokerage company added.

The new wave of activity in the property market has raised eyebrows of many a market observer. The last couple of months saw revolutionary changes in the property market in Dubai.

It was said to be The Palm which came out with the idea of freehold ownership for expatriates in May, this year. This was followed by Emaar through an announcement soon.

Soon both came out with the 90 per cent loan facility which again was welcomed by the market with enthusiasm. While The Palm roped in National Bank of Dubai (NBD)to act as its mortgage finance arrangers, Emaar already had its wholly owned subsidiary - Amlak Finance to do the job.

The latest development from Emaar side was that the company is in negotiations with banks and financial institutions across GCC to thrash out tie-ups so that the mortgage finance in their respective countries can be effectively taken care of.

According to sources, Emaar is on the verge of finalising deals with Al Rajhi Group of Saudi and Kuwait Finance House (KFH) of Kuwait.

The latest development in the property market emerged two days ago when the new entity - Jumeirah Beach Residence came out with residential property project where expatriates also can have freehold ownership backed by the relaxed mortgage finance facilities.

Here, 35 per cent of the residential units are reserved for nationals.

According to official statements flowing from these high profile property development entities, enquiries are pouring in, and there remains not even a speck of doubt on the success of these ventures.