Dubai – Mubasher: Emaar Properties on Sunday announced that it was planning to proceed with the initial public offering (IPO) of its build-to-sell (BTS) property development business, Emaar Development LLC on the Dubai Financial Market (DFM).

The Dubai-based and listed developer expects to offer 20% of its wholly-owned real estate subsidiary in line with its strategy of “bringing subsidiary companies to market once they have reached sufficient maturity,” a statement by Emaar showed.

Over the next five years, Emaar Development plans to launch around 50,400 units with an average annual unit sales target of 10,000 units and a targeted overall gross profit margin of 40%, in line with its historical track record, the mother company revealed.

Since 2002, Emaar Development has delivered north of 34,500 residential units.

“The IPO of our UAE development business will allow potential investors an opportunity to participate in a pure play UAE developer offering strong and stable cash flows and an attractive dividend yield,” commented Emaar Properties chairman Mohamed Alabbar.

“[The IPO] offers the opportunity for Emaar Properties’ shareholders – including the UAE Government – to unlock the true value of our UAE development business,” he added.

By the end of September 2017, approximately 22% of all freehold units in Dubai are located under Emaar’s integrated lifestyle masterplan communities, a recent report by international real estate professional services firm Jones Lang LaSalle (JLL) showed.

Meanwhile, Emaar Properties’ CEO Chris O’Donnell noted that Emaar Development’s clear strategy will enable it to continue delivering high-quality integrated lifestyle communities.

“Our strong sales backlog and access to significant premium land banks in prime locations – together with a growing real estate market in an enhanced regulatory and stabilised pricing environment – positions the business well for the benefit of future shareholders,” O’Donnell added.

Emaar Development boasts a number of highlights including a “high-quality land bank of 170 million square foot gross floor area (GFA)^[1] for BTS properties in the UAE, which at the Company’s average development rate is expected to provide 12 years of project launches and 16 years of project completions,” the statement showed.

By the end of September, Emaar Development has completed the sale of 80% of its units under development “with an average gross profit margin of 41% for units sold, and an associated sales backlog of AED 41 billion,” the mother company revealed.

It further added that cash flow expected from the company’s sales backlog amounts to around AED 18 billion over the next four years.

Also by the end of the third quarter of 2017, Emaar Development’s available units for sale over the next two to three years in its projects under construction are around 4,800 units, with an aggregate estimated sales value of AED 15 billion.

“Emaar Development seeks to continue its successful pre-sale funded model, which targets approximately 70% of units sold within the first year following launch, and typically between 30% and 40% of cash collected before major construction works commence,” the statement indicated.

A leading developer of both residential and commercial BTS assets across the UAE, Emaar Development is the company behind a number of iconic freehold developments and communities in Dubai, including Emirates Living, Downtown Dubai, Dubai Marina, and Arabian Ranches.