Emaar Properties hasn’t wasted a moment in assuring investors that the Dh7.5 billion deal to buy all of Dubai Creek Harbour will unquestionably be good for the business in the medium to long term.
The deal with Dubai Holding will effectively enhance ‘Emaar’s returns by accessing 100 percent of the profits to be generated from Dubai Creek Harbour development over its development lifetime,” said the Dubai developer. (Emaar will also be looking to boost shareholders through its H1-2022 results, helmed by record sales.)
Emaar also presented the data to support its claims. The Dubai Creek Harbour, a collection of high-rise residential buildings with various mixed-use options, reported Dh4.2 billion in sales for 2021 and added another Dh3.6 billion between January and the end of June this year.
“This clearly reflects the significant demand for properties at Dubai Creek Harbour and future profit potential of the development, which is the primary consideration for Emaar in respect of the acquisition,” the developer said.
On Friday, reasonably strong volume saw a 1.57 percent decline in the price of Emaar shares, to Dh5.61. Investors undoubtedly wanted to know how the deal, which had just been announced, would affect Emaar’s financial performance. (Earlier, Emaar Malls was re-integrated; this is the second significant consolidation the company has recently undergone.)
Regarding the Dubai Holding transaction, Emaar stated that it will also assist ease “strain on Emaar’s cashflows through a combination of an issue of shares and cash for consideration.”
An independent valuer placed the project’s operating firm, Dubai Creek Harbour LLC, between Dh14.6 billion and Dh15.7 billion.
‘Undervalued’
“I don’t think the 1.57 percent dip last Friday was heavy – in fact, the company is still undervalued,” said Vijay Valecha, Chief Investment Officer at Century Financial. “We could see short-term investors pull back owing to higher interest rates (and what it means for property demand), but overall Emaar looks on the upward trajectory.
“The H1-22 results were great and, at any time, consolidation is better long-term.”
What Emaar should expect from the Dubai Creek Harbour deal:
- Control over the entirety of the beneath-ground undeveloped area, which is “strategically positioned” and contains “more than 100 million square feet of prospective development”;
- Emaar will be able to make decisions more quickly, which will “improve the entire project execution and realization of the development,” and
- Access 100% of the revenues that will be made throughout the course of Emaar’s development to increase returns.