Shares in UAE property companies surged yesterday on news that Dubai was planning to build the world's biggest shopping mall, 100 new hotels and a Universal Studios theme park.
On Saturday Sheikh Mohammed bin Rashid, Vice President of the UAE and Ruler of Dubai, announced the new mega-project, dubbed Mohammed bin Rashid City, adding that the mall would be able to receive 80 million visitors a year and the theme park 35 million.
The news boosted stocks in Emaar, the Dubai property developer named as one of the two developers of the scheme, alongside the government-owned Dubai Properties Group.
Emaar shares rocketed 4.93 per cent in intraday trading on the Dubai Financial Market, their biggest gains since July, before closing at a five-week high of Dh3.73.
The news also spurred other UAE property stocks.
Shares in Union Properties, which has undertaken little new development work in recent years, rose 0.25 per cent to 40 fils and fellow developer Deyaar rose 0.9 per cent to 34 fils.
Construction firms also benefited from the outbreak of optimism, with shares in Dubai's biggest listed contractor Arabtec rising 1.3 per cent during the day to Dh2.32. The emirate's second-biggest contractor, Drake & Scull International, rose 0.55 per cent to 73 fils.
Emaar's rise also spurred the DFM General Index to its biggest intraday gains in eight weeks as the market rose 1.4 per cent in early trading before settling back to 1,601.84 at the close - a 0.3 per cent rise that reversed last week's losses caused by conflict in Gaza.
In Abu Dhabi the news boosted the property developers Aldar and Sorouh Real Estate, which were both up 0.81 per cent yesterday.
"At the end of the day it's positive news for the UAE," said Saleem Khokhar, the head of equities at National Bank of Abu Dhabi. "I've heard a few negative comments that we're back to the heady days of 2008, but then more bullish investors are actually saying no, it's more like 2003 before the boom."
"We've all learnt a lot of lessons, and it's clear to investors that the developers are not going to go in a mad, blind rush forward but will be delivering this project bit by bit.
"Analysts will be forced to revise their price targets for Emaar upwards with this news. There has been a tide of confidence sweeping the Dubai market for a while, and that was clear today with a lot of people booking profits," he said.
Sebastien Henin, a portfolio manager at The National Investor, an investment company based in Abu Dhabi, said "the announcement was a good surprise for the markets.
"But unfortunately due to the bad news coming out of Egypt and Saudi Arabia, the gains seen this morning were not sustained. The sectors which are performing most strongly in Dubai at the moment such as the hospitality and retail sectors are not mostly quoted on the stock market, so the market is not enjoying as strong a rebound as it could. In my view it is just a matter of time for this to feed through."
