JEDDAH — A sell-off in the property sector slowed Saudi Arabia's advance on Tuesday after the government approved a plan to tax undeveloped land, while Oman rallied because of the return of Sultan Qaboos after lengthy medical treatment abroad. The Saudi stock benchmark Tadawul All Share Index index inched up 0.12 percent to 9,331.19 points as food maker Savola Group extended its rebound, jumping 2.9 percent. Another major support was Saudi Cement Co, which rose 2.5 percent. Major builder Abdullah Abdul Mohsin Al-Khodari and Sons jumped 2.8 percent and modular building producer Red Sea Housing Services rose 3.7 percent after the Riyadh government took a major step towards implementing its stalled housing program. Aiming to push more land out into the market, the cabinet on Monday approved a proposal to tax undeveloped land in urban areas. Much urban land is currently owned by wealthy individuals or firms who prefer holding it as a store of value, or trading it for speculative profits, to the process of developing it. It is unclear if the tax will apply to property developers, some of which have large land banks, but investors started dumping the stocks in the belief that land prices will be forced down by the tax. Dar Al Arkan, one of the biggest Saudi Arabian developers, tumbled 6.5 percent and Emaar Economic City was down 6.6 percent. According to Dar Al Arkan's latest financial report, its revenue from land sales was SR2.9 billion in 2014, while its total revenue was SR3.1 billion. The company said it sold land with basic infrastructure. Mazen Al-Sudairi, head of research at Al-Istithmar Capital in Riyadh, said rising prices and limited availability of land had dampened many areas of Saudi business activity, so the tax could have a broad, positive effect on the economy. "The decision opens growth opportunities even to other sectors. Retailers, which mainly depend on leases, can now buy land and expand. Cement firms will grow with rising demand, and even banks will prosper as they will lend to those firms." Elsewhere, Dubai's index edged up 0.3 percent to 3,513 points as local stocks were mixed. Dubai Islamic Bank, up 2.0 percent, was the main support. Builder Arabtec rose as much as 2.0 percent after winning a $283 million contract from Saudi Aramco to build 380 villas in Saudi Arabia, but then came under renewed pressure and closed 1.2 percent lower. On Sunday, Arabtec said it had swung to a net loss of 94.4 million dirhams ($25.7 million) in the fourth quarter of last year. It also proposed no cash dividend, offering a 5 percent bonus share issue instead. Abu Dhabi's bourse edged up 0.2 percent to 4,391 points as Aldar Properties jumped 2.6 percent ahead of a dividend registration deadline and after announcing it had sold all 281 land plots at its new Al Merief development in just one week, which will generate 600 million dirhams of revenues in the coming quarters. Oman's bourse rose 1.2 percent, its biggest daily gain in more than two months, in a broad rally after Sultan Qaboos returned home "in complete health" on Monday from an eight-month medical stay in Germany. Egypt's market inched down 0.1 percent in a lacklustre session. Ezz Steel tumbled 4.8 percent to 14.56 Egyptian pounds after two brokers cut their fair value estimates for the stock. On Monday, EFG Hermes cut Ezz Steel's fair value to 21.00 pounds from 23.00 pounds, and on Tuesday CI Capital reduced its price target to 18.50 pounds from 23.50 pounds. — SG/Reuters
