DUBAI: Dubai luxury real estate developer Damac got a lukewarm response to its share offering in London yesterday, a sign that international investors are still wary of the emirate’s property market despite a recent recovery in prices.
Property prices in Dubai have rebounded by over 20 percent this year having slumped more than 50 percent from a 2008 peak when a real estate market crash sparked a debt crisis.
But some analysts have said the recovery has been driven by speculative buying, with the International Monetary Fund warning of another possible bubble. DAMAC, which gave away yachts and sports cars to buyers of its luxury properties during the downturn, said it raised $348m from the sale of 28.39m global depositary receipts (GDRs). It had originally hoped to raise $500m but reduced the size last week, with the final price set at $12.25 per GDR — bottom of the initial range.
“It may have been too early to test the merit of the Dubai real estate market; even though the markets have recovered sharply, we are coming back from a steep decline and a very low base,” said Akber R Naqvi, Executive Director at Dubai-based asset manager Al Masah Capital.
Investors in the offering were split roughly 40/40/20 percent between the Gulf, the United States and the United Kingdom, a banker who worked on the deal said. The GDRs were flat with muted trading at 1340 GMT.
The share sale put a value of $2.65bn on DAMAC which is the first Dubai property developer to list in London.
DAMAC’s latest project is a Hollywood-themed 28 million square foot retail and residential development billed as ‘the Beverly Hills of Dubai’ which will include a golf course built in partnership with American mogul Donald Trump.
Reuters
