Feb. 24 (Bloomberg) -- Dubai stocks rallied to the highest level in more than three years as Emaar Properties PJSC’s new hotel project fueled bets revenue of the developer of the world’s tallest skyscraper will grow this year.
Emaar surged 4.6 percent after the company said it would build two luxury hotel and serviced apartment towers in central Dubai. Arabtec Holding Co., the largest United Arab Emirates builder by market value, rose to the highest level in almost three weeks. The benchmark DFM General Index gained 1.2 percent to 1,945.95, the strongest close since November 2009.
“The assumption is that with growing confidence in U.A.E. real estate, any new developments offered for sale will command ever-increasing premiums,” said Julian Bruce, Dubai-based head of institutional trading at EFG-Hermes Holding SAE.
Emaar, which sold out the first phase of a separate luxury hotel development last month, said it will accept offers in Dubai and Riyadh on March 2 for The Address Residence Sky View project. The city’s property market is recovering after prices tumbled more than 65 percent from a 2008 high. The economy may have expanded 5 percent in 2012, the fastest pace since 2007, as tourism, hotel and restaurant industries pick up, government forecasts show.
“Recent offerings have met with robust demand and with multiple international launches this latest project is expected to be extremely well-bid,” Bruce said.
Dubai shares trade at an average price-to-book value of 0.8 times, compared with 1.8 times for stocks on Saudi Arabia’s Tadawul All Share Index, the Persian Gulf’s largest bourse, data compiled by Bloomberg show. The 31 companies on Dubai’s measure trade at 11 times estimated 2013 earnings, compared with 11.3 times for the Saudi gauge.
Emaar surged to 5.26 dirhams, the highest since November 2008. The company’s board will meet tomorrow to discuss a full year dividend after 2012 net income advanced 18 percent. Emaar’s share price may rise to 6 dirhams as apartment sales pick up amid increasing demand, HSBC Holdings Plc said earlier this month.
Arabtec advanced 1.3 percent to 3.02 dirhams, the highest level since Feb. 5.
The DFM General Index’s 14-day relative strength index jumped to 75 today from 72 last week. A reading above 70 indicates to some analysts that a security or index is poised to decline. About 209 million shares were traded today, compared with a 12-month daily average of 180 million shares.
Elsewhere in the Middle East, Abu Dhabi’s ADX General Index gained 0.2 percent. Saudi Arabia’s Tadawul All Share Index and Bahrain’s measure were little changed. Oman’s MSM30 Index declined 0.3 percent. In North Africa, Egypt’s benchmark EGX 30 Index lost 0.8 percent. Markets in Kuwait and Israel were closed for holidays.
--Editors: Daliah Merzaban, Claudia Maedler