Dubai developer Union Properties is to seek board approval to increase the percentage of shares which foreign investors are allowed to hold in the company, its chairman said on Wednesday.
The move is part of a wider trend by companies in the United Arab Emirates and Qatar to review their often-low foreign ownership caps ahead of their admittance into the MSCI Emerging Markets Index in May.
“We are studying how much we could increase (the foreign ownership limit) to and will recommend to the board by December,” Khalid bin Kalban, chairman of Union Properties, told reporters at a media event in Dubai.
At present, non-UAE nationals can own up to 15 percent of the developer, a favorite stock among retail investors on the Dubai Financial Market.
The stock was down 4 percent at 0840 GMT, trimming year-to-date gains to 118.7 percent. It has benefited in 2013 from a strong rally on the Dubai bourse and renewed confidence in the emirate’s real estate sector, which has recovered from the bursting of a bubble in 2009.
Last week, Dubai-listed lender Mashreq said it will allow foreigners to own up to 20 percent of its shares. In June, Qatar’s stock market said Commercial Bank of Qatar and Qatar Islamic Bank would raise foreign ownership limits to 25 percent within nine months.
Index compiler MSCI announced in June that both the UAE and Qatar would be upgraded to emerging market status in a long-awaited move. The shift will draw in new funds into both markets from investors who track the MSCI index.
Kalban said he expected top shareholder Emirates NBD to retain its stake at the current 15 percent level after the lender sold parts of its holding in the market over the past few months. It held 48 percent at the start of 2013.
“ENBD dropping its stake has been positive for us and investors have shown a lot of interest in the company,” said Kalban, adding he didn’t expect any takeover moves for the firm.
Union Properties was working on six new projects worth a total of 1.5 billion dirhams ($408.4 million), of which it would require around 800 million dirhams from local banks to help fund their construction, Kalban said.
The recovery in the real estate market is also helping Union Properties’ bottom line - Kalban said it would likely make a profit for the first nine months of 2013 in the region of 250-260 million dirhams.
This is up from the 156 million dirhams it posted in the corresponding period of 2012.
($1 = 3.6730 UAE dirhams)
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