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Dubai: Emaar Properties and Dubai Holding said on Saturday they had decided to cancel a proposed land-share swap deal in the interest of Emaar shareholders.
The decision to pursue such an arrangement follows the recent management assessment that any land-equity swap agreement would not be in the interest of Emaar shareholders, both companies said in a joint statement.
The companies are currently exploring joint venture arrangements to develop land in prime locations in Dubai. The announcement of specific joint venture projects is expected to be made in September.
"Emaar and Dubai Holding continue to believe that both companies would benefit from working together on real estate projects in Dubai," said Mohammad Al Gergawi, executive chairman, Dubai Holding.
Emaar chairman Mohammad Al Abbar said, "Dubai Holding has a large land bank in prime locations in the emirate, and Emaar, with the right track record and experience in developing real estate projects, will have access to that attractive land bank." The Dubai Government already owns 32 per cent of Emaar.
Analysts said Emaar's stock should recover when trading resumes on Sunday because the announcement ends the uncertainty that drove the selling, especially after global credit market turmoil made investors more reluctant to take risk.
"The decision will have a positive impact on the market. The uncertainty had affected investment decisions, especially by large institutional investors. The announcement has brought more clarity in the market. In the short term small investors will be unhappy, because the share is likely to remain highly volatile," said Mohmmad Yasin, managing director of Shuaa Securities.
"The timing of the announcement is just right for the market as the market had tanked substantially in recent weeks and the impact of this decision can't damage the sentiment any further," he added.
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