Dubai’s Union Properties To Seek Foreign Ownership Increase

Dubai developer Union Properties is to seek board approval to increase the percentage of shares which foreign investors are allowed to hold in the company, its chairman said on Wednesday.

The move is part of a wider trend by companies in the United Arab Emirates and Qatar to review their often-low foreign ownership caps ahead of their admittance into the MSCI Emerging Markets Index in May.

“We are studying how much we could increase (the foreign ownership limit) to and will recommend to the board by December,” Khalid bin Kalban, chairman of Union Properties, told reporters at a media event in Dubai.

At present, non-UAE nationals can own up to 15 per cent of the developer, a favourite stock among retail investors on the Dubai Financial Market.

The stock was down four per cent at 0840 GMT, trimming year-to-date gains to 118.7 per cent. It has benefited in 2013 from a strong rally on the Dubai bourse and renewed confidence in the emirate’s real estate sector, which has recovered from the bursting of a bubble in 2009.

Last week, Dubai-listed lender Mashreq said it will allow foreigners to own up to 20 per cent of its shares. In June, Qatar’s stock market said Commercial Bank of Qatar and Qatar Islamic Bank would raise foreign ownership limits to 25 per cent within nine months.

Index compiler MSCI announced in June that both the UAE and Qatar would be upgraded to emerging market status in a long-awaited move. The shift will draw in new funds into both markets from investors who track the MSCI index.

PROFIT HIKE

Kalban said he expected top shareholder Emirates NBD to retain its stake at the current 15 per cent level after the lender sold parts of its holding in the market over the past few months. It held 48 per cent at the start of 2013.

“ENBD dropping its stake has been positive for us and investors have shown a lot of interest in the company,” said Kalban, adding he didn’t expect any takeover moves for the firm.

Union Properties was working on six new projects worth a total of Dhs1.5 billion ($408.4 million), of which it would require around Dhs800 million from local banks to help fund their construction, Kalban said.

The recovery in the real estate market is also helping Union Properties’ bottom line – Kalban said it would likely make a profit for the first nine months of 2013 in the region of Dhs250-260 million.

This is up from the Dhs156 million it posted in the corresponding period of 2012.