(ASHRAF AL AMRA)
Emaar is bullish about the Indian real estate market and will reconsider its initial public offering (IPO) “when the time is right”, according to its chairman.
“India will be one of our largest operations and we have long-term plans there. The economy is doing well and we see a bullish story for the next 20 to 25 years,” Mohamed Ali Alabbar told the annual general meeting (AGM) of the company.
In February, Emaar MGF withdrew its IPO for lack of adequate response. The company wanted to raise about Rs6,500 crore (Dh541 million), on the initial price band of Rs610-690. This was twice revised to Rs530-Rs630 and the closing date extended to February 11 from February 6.
“We will go public at the right time. We are cash rich and we may even double our size,” he said, without referring to the IPO size or scale of operations in India.
Addressing the AGM, Alabbar said the Indian and Morocco operations have contributed between Dh150m to Dh200m to the firm’s profit and loss account in the last quarter of 2007.
India has recently been ranked among the three hottest regions for property growth in the Asia-Pacific region over the next five years, with Mumbai registering rental growth of over 50 per cent over the year, according to law firm Allens Arthur Robinson.
Emaar MGF has also chalked out plans to set up the Armani brand of luxury hotels in places such as Mumbai, Delhi and Goa, according to Business Standard.
“Emaar MGF is expanding aggressively in the Indian hospitality sector with several luxury hotels. These could include Armani Hotels & Resorts. Currently, Emaar is evaluating options for launching an Armani property in the country,” the paper quoted a spokesperson as saying.
Burj Dubai will host the first Armani Hotel, that will be opened in the last quarter of 2008.
The Armani Hotel Dubai will include restaurants, 160 guest rooms and suites, and a spa covering more than 40,000 square metres.
Earlier, in an interview with Kuwait’s Al Qabas newspaper, Alabbar said soaring demand for offices and homes is the main reason for the high cost of living and inflation in the UAE.
He added the developer was considering listing on overseas markets – particularly Nasdaq – but will make such a move only when conditions were suitable.
“We have a simple problem at the moment, which is the high demand for offices and accommodation,” he said “Over the next 24 months the release of new residences will lower prices. But unfortunately the high costs are everywhere.”
He said rents and property prices would fall after two years. But he added: “The level of rents in Dubai will remain 100 per cent higher than the levels elsewhere in the Gulf as the emirate is a financial centre. But of course we are cheaper than London and most other global commercial hubs.
“Nobody can say to me that London is cheaper as taxes on income and companies are not lower than what we have.” Asked why Emaar shares were listed only on the Dubai Financial Market and not on exchanges abroad, he said: “We consider that, especially listing on Nasdaq. But we wait for suitable circumstances.”
A recent HSBC Bank report on Emaar said its shares were trading at below their fair value. But Alabbar told Kuwait’s Al Qabas newspaper, he was more focused on the company’s operations.
“Every person running a giant joint-stock company such as Emaar should concentrate on the work of the company,” he said. “He should not concentrate on the shares. The most important thing is the growth in profits and budget.
“The share’s level is governed by the buyer. But don’t forget the Gulf exchanges are going through difficult conditions, just like all exchanges in the world.”
Alabbar said Emaar was unaffected by the sub-prime crisis. And he maintained the firm was on course to meet its target of becoming the world’s biggest property developer in terms of market value by 2010.
Emaar bullish on Indian realty and to reconsider IPO at the ‘right time’