Strong investor appetite for initial public offerings (IPO) is helping make flotations an increasingly attractive alternative funding option for Dubai-based developers.

After several years of stagnation, this year has seen the resurgence in the Dubai IPO market. Developers are turning away from relying on short-term bank debt to fund projects and considering flotations on Dubai’s exchanges as an appealing way to secure additional equity to underpin their expansion.

The use of longer-term debt instruments such as bonds and sukuks are also being used more frequently to fund companies’ ambitions.

The latest firm to take up the IPO option is Dubai Parks & Resorts, a subsidiary of developer Meraas Holding. It is looking to raise AED2.5bn ($681m) from investors to form the equity portion of a funding package that will support the construction of its planned theme parks to be built in the emirate.

The offering is expected to be welcomed by UAE investors, with their confidence in the new company buoyed by the rapid growth seen in the Dubai tourism sector.

Investors have also long been waiting for an opportunity to have exposure to a different sector such as the tourism and leisure industry, with Dubai’s main exchange, the Dubai Financial Market (DFM) typically dominated by financial institutions and construction firms.

Other flotations this year have also helped diversified the range of sectors available to investors.

The IPO of healthcare and education start-up Amanat, launched in November, was 10-times oversubscribed. Similarly, the IPO by retail start-up Marka earlier this year was also oversubscribed.

With each successful IPO, an increasingly diverse range of companies in Dubai are likely to consider flotations as a new funding tool.