Dubai stocks rallied to the highest level in more than three years as Emaar Properties' new hotel project fuelled calls that the revenue of the developer of the world's tallest skyscraper would grow this year.
Emaar surged 4.6 per cent after the company said it would build two luxury hotel and serviced apartment towers in central Dubai. Arabtec Holding, the largest UAE builder by market value, rose to the highest level in almost three weeks. The benchmark Dubai Financial Market General Index gained 1.2 per cent to 1,945.95, the strongest close since November 2009.
"The assumption is that with growing confidence in UAE real estate, any new developments offered for sale will command ever-increasing premiums," said Julian Bruce, the Dubai-based head of institutional trading at EFG Hermes.
Emaar, which sold out the first phase of a separate luxury hotel development last month, said it would accept offers in Dubai and Riyadh on Saturday for The Address Residence Sky View project. The city's property market is recovering after prices tumbled more than 65 per cent from a 2008 high. The economy may have expanded 5 per cent last year, the fastest pace since 2007, as tourism, hotel and restaurant industries pick up, government forecasts show.
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 Arabian Gulf's largest bourse, data compiled by Bloomberg shows.
Emaar surged to Dh5.26, the highest since November 2008. Arabtec advanced 1.3 per cent to Dh3.02, the highest level since February 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.
Elsewhere, the Abu Dhabi Securities Exchange General Index gained 0.2 per cent.
* Bloomberg News