Dubai's Union Properties mulls share buyback

Union Properties (UP), Dubai-based real estate developer, will consider buying back shares if the price falls below face value, according to company chairman.

“We will have to think about it [buyback] when the share price comes below the face value.

“Before we took over the share value was below the face value that was a good opportunity not only for the company to buy back but also for other investors to buy the share,” Khalid bin Kalban said on Tuesday after announcing its new venture ‘ServeU Saudi Arabia’, a joint venture with Saudi-based company Al Haddab Group.

The stock closed at Dh1.01 on the Dubai Financial Market (DFM) on Tuesday.

Emirates 24|7 had reported in 2008 that the company was considering a buyback, but no decision was taken on it following the global financial crisis.

Dh120m cash dividend

Kalban said the three per cent, or Dh0.03 per share, in cash dividend will result in a pay out of Dh120 million, compared to Dh40 million that was paid in 2002.

Besides, it will pay five per cent as bonus share in 2014.

“Investors are very happy that the company is giving eight per cent.

“Since its establishment, UP has not given more than five per cent. There are lot of people who are speculating that we don’t have the ability to pay cash, but we have proven that the company is paying cash and will continue paying cash. So it is on the right track.”

He attributed lack of liquidity in the stock market due to the high number of initial public offerings in a short span of time.

“There is no liquidity in the market as it has been sucked by the IPO and sit in the accounts of the company which don’t invest in the market.

“We had five IPOs which have sucked Dh15 billion out of the market. In order for you to create liquidity in the market, you need to spread one IPO every quarter.

“The five came in one quarter, it should have come in 24 months.”

Dh500m rental portfolio

The developer is also planning to build a rental portfolio of Dh500 million in the next five years as the chairman ruled out a “downturn” in the property market.

“We are trying to build a rental portfolio as we have used the previous one to settle with the banks.

“We had Dh80 million revenue from rental portfolio which we want to increase to at least Dh500 million is five years’ time.

“I believe in 2016 we will have Dh100 million revenue out of Uptown Mirdif, Ribbon and other project and will give stability to the company.”

On Monday, Kalban, who is also the CEO of Dubai Investments, told this website that he expects the property market to gain momentum in 2016 with “affordable” housing category outshining the “luxury” segment.

Read: Dubai's next property boom: Affordable housing for Dh10k earners

Union Properties has announced three projects worth over Dh2 billion including Dh1.1 billion The Vertex, a five-tower project, in MotorCity, Dubailand.

Expansion on cards

The developer is also planning to venture into real estate development in Saudi Arabia, with ServeU Saudi Arabia being the first venture.

“The company has been set up with a fund of 1 million Saudi riyals. Being in the facilities management business, we don’t need huge funds and finance can be raised whenever required. We believe there is huge potential in that sector in Saudi Arabia,” Kalban said.

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