Emaar Properties plans to issue benchmark sukuk as Dubai real estate market improves

An Emaar-branded high-rise building in Dubai. S&P Global Ratings expects the company to hand over 6,000 units this year and close to 10,000 in 2022, based on its project pipeline. Chris Whiteoak / TheShow more

Emaar Properties, the UAE's biggest listed property developer by market capitalisation, plans to issue a new benchmark sukuk.

The company appointed Dubai Islamic Bank, Emirates NBD, First Abu Dhabi Bank, Mashreq Bank and Standard Chartered Bank as joint lead arrangers for a global investor call and a series of one-to-one and group meetings with fixed income investors, it said in a statement to the Dubai Financial Market, where its shares trade.

"A benchmark US dollar ... senior unsecured sukuk with a 10-year tenor under Emaar Properties' $2 billion Trust Certificate Issuance Programme may follow subject to market conditions," it said.

A benchmark bond or sukuk is generally classed as a debt issuance of at least $500 million.

Bond issuances by Gulf entities are expected to be around $125m this year, in line with last year's total, according to emerging markets specialist Franklin Templeton.

However, sovereigns are only expected to issue about 30 per cent of this, compared with 50 per cent last year, suggesting that more corporate issuers are looking to take advantage of the continued low-interest environment.

Ratings agency S&P Global lifted its outlook on Emaar Properties to stable from negative on Sunday, maintaining its BB+ rating.

The agency attributed the change in outlook to improving first quarter data for this year, which "suggests that the residential real estate market in Dubai has bottomed out and now offers attractive opportunities for developers, especially for premium properties".

Developer Knight Frank said on Monday that the luxury end of the market is enjoying a boom, with the emirate recording 22 residential sales in the $10m-plus bracket in the first five months of this year, compared with 19 for all of last year.

Emaar Properties, which accounts for more than half of new home sales in Dubai and focuses on the premium end of the market, is set to generate more cash flow from operations as it hands over more units this year and next, S&P Global said.

"We expect that the company will deliver about 6,000 units in 2021 after delivering 4,800 units in 2020. We also think that handovers will increase to close to 10,000 in 2022, based on the project completion pipeline."

Emaar Properties' share price closed 1.6 per cent lower at Dh4.21 on Monday but is up 52 per cent on the same period last year. It has a market capitalisation of Dh30.14bn.