Leading a decline in Dubai stocks, Emaar Properties PJSC shares slid their most in two weeks over concern a fire on New Year’s Eve that ripped through a hotel the firm owns would curb earnings. Abu Dhabi shares also fell.
Emaar dropped as much as 4.4 percent, before paring its slide to 2.6 percent at 11:01am in Dubai trading.
The developer of the world’s tallest tower was the biggest contributor to the DFM General Index’s 1.2 percent loss. Abu Dhabi’s ADX General Index retreated 1 percent. The fire is covered by insurance and Emaar sees “no material impact” to the company because of the blaze, according to a company statement to the stock exchange issued yesterday.
“Emaar’s statement helped halt some of the panic selling we saw at the beginning of the session, but investors still have questions,” Menacorp Dubai-based institutional business head Samer Al-Jaouni said. “The company needs to clarify the amount and percentage of cash flow that this hotel was contributing to Emaar’s hotel portfolio.”
Emaar developed, owned and operated the Address Downtown Dubai hotel, which on Thursday caught fire as Dubai prepared for its New Year’s Eve fireworks display. The blaze capped a challenging year for the real-estate industry in the emirate, which saw prices decline with oil. The dirham’s peg to the US dollar made properties more expensive for buyers from Europe and emerging markets, where some currencies weakened last year.
The DFM Real Estate Index retreated 2.8 percent, the most in two weeks, before trading 1.9 percent lower. The gauge sank 25 percent last year, the most since 2008. Emaar Malls Group PJSC, which is about 85 percent owned by Emaar Properties, fell 1.8 percent.
Fifteen people sustained light to moderate injuries in the incident, while one person suffered a heart attack, the Dubai media office said on Thursday. The blaze comes almost one year after a fire at the Dubai Marina Torch, one of the world’s tallest residential buildings. In 2012, the Tamweel Tower in the Jumeirah Lake Towers district neighboring the marina was wrecked by fire.
Abu Dhabi’s First Gulf Bank PJSC led the index’s retreat with 2.8 percent drop, the biggest decline in two weeks. Abu Dhabi Islamic Bank slid 3.6 percent, the biggest drop since Dec. 20.
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