Offering will the largest since the 2014 IPO of Emaar Malls
Emaar Properties, the global real estate company, has announced that it plans to offer up to 30% of its UAE real estate development business in an initial public offering (IPO), which will be the largest since the Emaar Malls IPO in 2014.
In a statement to the Dubai bourse, Emaar Properties said that the decision to list the UAE Real Estate Development Business came about because of an internal review of Emaar’s asset values. Although subject to market conditions, it added that the funds raised through the sale of equity would be primarily distributed as dividends to its shareholders to help create significant value for them.
Emaar pointed out that this indicated the importance of highlighting the value of its business as a major contributor to the overall profitability of the developer through an independent listing.
Investors who value the proven development track record of Emaar can invest directly in this business and benefit from the strong growth profile of the company’s UAE development business, the statement added.
In turn, this will enhance Emaar’s overall valuation as the value of this important business is properly recognised in the market, it said.
“The proposed listing and the additional dividend to our shareholders including (the) Government of Dubai underlines our commitment to provide superior value to all our shareholders for their unwavering support to the company since its inception in 1997,” said Mohamed Alabbar, chairman of Emaar Properties.
“Over the years, we have generated significant returns from our UAE real estate development business and it continues to be a strong driver of growth for the group. As Emaar’s other businesses have grown and expanded, we wanted to ensure that investors who value the UAE Real Estate Development business the most, the foundation of Emaar’s success, can do so directly. This will ensure that the value of this business is properly recognised, thereby enhancing value for all Emaar shareholders,” he stated.
“We are drawing on our success to create a new Emaar defined by an expanded development pipeline in Dubai anchored by iconic structures such as The Tower at Dubai Creek Harbour.”
Over the last five years, Emaar’s real estate development in UAE has recorded significant growth. Real estate sales increased from $1.14 billion in 2012 to $3.92 billion in 2016. Until end of May 2017, the business recorded sales of $2.64 billion, 24% above the same period in 2016.
Total backlog as at the end of May 2017 is $10.89 billion. This backlog represents the value of properties sold but where related revenues have not been recognised.
“Emaar’s value proposition is an unwavering commitment to provide the best-in-class service to our customers, which will be the main pillar for the UAE Real Estate Development business to achieve significant successes. We have high-calibre professionals who lead our various businesses and we are also investing in young talent,” Alabbar added.
Since 2001, the Dubai developer has handed over around 34,000 units in Dubai. It currently has a significant land bank of 24 million sqm in the UAE. The total development area on these lands is 30 million sqm.