Property developer Sobha is planning an initial public offering of its UAE business in 2022 even as a slump in prices weighs on developers in its Dubai base.
The company will wait to meet profitability projections before making a final decision on the IPO, founder PNC Menon said in an interview. It hasn’t decided where to list the shares.
Sobha expects sales revenue to jump to about AED2 billion ($545 million) this year from AED620 million in 2018 as it hands over more homes in its Sobha Hartland development, Menon said. About 6,000 homes will be delivered at the $4 billion project over the next six years.
Property prices in the UAE, the second-biggest Arab economy, have dropped about 27 percent since October 2014 amid excess supply and sluggish economic growth. Emaar Properties, the biggest developer in Dubai, this month posted a 4 percent decline in first-half revenue.
Sobha is targeting annual sales of 2,000 housing units in Dubai that will result in revenue of AED2.5 billion and profit of about AED400 million by 2022, Menon said.
Prices in Dubai have stabilized and will “stay like this for the next three to five years,” he said. The market is crowded with developers and only the best will survive over the next five years, Menon said.
The Dubai Financial Market Real Estate Index has gained about 6 percent this year after tumbling 39 percent in 2018.
Menon and his family also own Sobha Ltd, a real-estate, design and construction company in India that’s listed in Mumbai.