Dubai's Damac said it raised $348 million from its London share offer on Tuesday, a lukewarm response to the first share sale by a Dubai property firm since the emirate's real estate crash four years ago.

The luxury housing firm, which describes its new villa project as the Beverly Hills of Dubai, had hoped to take advantage of a renewed interest in Dubai's property market aided by an overall recovery in the emirate's economy.

However, the company originally aimed to raise $500 million in London with the sale of global depositary receipts (GDRs). The deal size was later reduced to $400 million last week and the final price was fixed at $12.25, at the bottom of the price range.

The Dubai developer sold 28.39 million shares, valuing the firm at $2.65 billion, it said in a bourse filing.

Property prices in Dubai plunged over 50 per cent during the crash as a bubble burst, but the real estate market has staged a recovery and residential prices have rebounded over 20 percent, aided by growth in Dubai's trade and tourism sectors.

Damac's offering could increase to $400 million if a greenshoe or over-allotment option for an extra 15 per cent of the offer size is exercised, the statement added. Should this option be activated, 15 per cent of the company would be listed.

The company and the selling shareholders have committed to a lock-up period of one year from admission.

Citigroup and Deutsche Bank are joint bookrunners for Damac's offer, with the investment banking arm of Saudi Arabia's Samba Financial Group and VTB Capital acting as co-lead managers.

London has seen a revival in IPO activity this year as confidence has returned on the back of booming equity markets, with more firms going public there by mid-November than in the same period of any year since 2007, according to Thomson Reuters data.

However, the stock market rally has stalled in recent weeks, and that has affected IPOs. Italian freight-forwarding company Savino del Bene extended its Milan share sale process on Monday, while Austrian packaging group Constantia Flexibles cancelled a planned stock market debut after investor demand fell short of expectations.

Shares in the last company to have floated in London, Just Retirement, closed on Monday at 2 pounds per share, having never closed above its November 12 initial public offer price of 2.25 pounds.-Reuters