Emaar Properties had a strong run this month on investor expectations of bigger quarterly profits from its malls and hotels after tourists flocked to Dubai during the Arab Spring.
Shares in the developer, which built the Burj Khalifa, have increased more than 6 per cent since the beginning of the month.
"Investors want to see dividends," said Haissam Arabi, the chief executive at Gulfmena Investments in Dubai. "The market will be happy if they keep up, or increase what [Emaar] paid out last year." The company paid a 10 per cent dividend for 2010, its first distribution of profit to shareholders since the onset of the global financial crisis in 2008. Analysts expect Emaar to report a profit of Dh436 million for the fourth quarter,compared with a Dh273.4m profit a year earlier.
Dubai property prices have failed to improve since unrest broke out in parts of the Middle East and North Africa, contrary to speculation that investors would regard the emirate as a haven, according to a Deutsche Bank report. But tourism has boosted hotel revenues - up 10.7 per cent per room as occupancy levels and room rates improved, data from STR Global showed.
Emaar's recurring income portfolio, which consists of Dubai Mall, Dubai Marina Mall and the Yacht Club hotel, among other assets, is expected to benefit from the increased traffic.
"The valuation implied by the market is very conservative," said Fadi Al Said, a senior fund manager at ING Investment Management. "Our view is that the recurring income portfolio is worth at least Dh2.80 per share, up from where its currently trading at Dh2.65."
The company secured a Dh3.6 billion facility last year by using the Dubai Mall as collateral to reduce short-term debt and lower financing costs.The company has US$1bn worth of debt repayment next year, according to Bloomberg News data.
"Emaar Properties is my top pick for 2012," said Mr Arabi.
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