Emaar shares drop as Dubai developer keeps dividend unchanged

Emaar Properties went for the biggest drop in more than three weeks as the developer proposed no change to its annual cash dividend despite a property recovery in Dubai.

Shares of the developer of the world's tallest tower declined 2.8 per cent to Dh5.14. Emaar fell the most on the benchmark DFM General Index, which lost 0.8 per cent. The company proposed a dividend of 10 fils per share for 2012, matching payouts in the prior two years.

"The market is disappointed as investors were expecting 15 fils to 20 fils this year, even though the chairman indicated that Emaar needs to retain liquidity," said Mohammed Ali Yasin, the managing director of Abu Dhabi Financial Services. "I'm sure there will be a lot of lobbying and haggling to raise dividend to 15 fils at the annual general meeting."

Investors in Dubai stocks, which have rallied almost 19 per cent this year, are chasing dividends after the emirate's economy grew at the fastest pace in five years, according to government estimates. Emaar's profit jumped 18 per cent in 2012 following a decline a year earlier. The developer made no payouts in 2008 and 2009 amid a real estate crash in the city that sent home prices tumbling more than 65 per cent.

Emaar, which said it will hold an AGM on April 9, agreed to resume dividend payouts in 2010 following a three-hour meeting that saw heated arguments between the shareholders and executives, who wanted to conserve cash for projects. The developer this month said it will offer units of a luxury hotel and apartment development in Dubai and Riyadh on March 2 following a sell-out response to those made available at a separate project in Downtown Dubai in January.

The dividend proposal was understandable "in light of the liquidity it needs to fund the future projects that the company announced and will commence in the near future," said Nabil Farhat, a partner at Al Fajer Securities in Abu Dhabi.

* Bloomberg News