Emaar Development, Dubai’s first big IPO since 2014, falls on debut

Shares in Dubai real estate firm Emaar Development fell on their debut on Wednesday in the emirate’s first major listing since 2014.

Emaar Development had an initial public offer price of 6.03 dirhams, equal to its net asset value according to an estimate by consultants JLL, which performed an independent valuation before the IPO. But the stock opened lower at 5.61 dirhams and closed at 5.77, down 4.3 percent. Over 48 million shares changed hands.

“It’s under pressure but once the dust settles, investors will eventually look at the long-term fundamentals and see it as a value buy, as it’s very attractive on a yield perspective,” said Ayub Ansari, senior analyst at Securities & Investment Co in Bahrain.

Emaar Development is offering an annualized dividend yield of 9 percent for the next three years, Ansari calculated, higher than the 7 percent offered by rival DAMAC Properties.

“Already a flagship brand and a market leader in Dubai, our successful IPO demonstrates that regional and international investors are excited by our proven business model,” said Mohamed Alabbar, chairman of Emaar Development.

The company’s assets include 49 units in Dubai’s Burj Khalifa, the world’s tallest tower, and projects in prime Dubai districts.

Parent company Emaar Properties sold a 20 percent stake or 800 million shares of Emaar Development in an IPO that raised $1.31 billion.

Dubai’s stock index is up 3.2 percent over the past 12 months, lagging a gain of more than 30 percent by MSCI’s emerging markets index.