Feb. 8 (Bloomberg) -- .Emaar MGF Land Ltd., controlled by the biggest Middle East developer, scrapped its $1.64 billion initial sale of shares following poor investor demand.

The real estate developer, which planned to sell 102.6 million shares in India’s second-biggest IPO by a real-estate company, said it will now consider selling shares when the stock markets are more stable.

``Stock market conditions are bad as no one’s committing any money at this point of time,’’ said Jayesh Shroff, who helps manage $5 billion at SBI Funds Management in Mumbai. ``Unless there is a fresh trigger, markets would remain range bound.’’

Emaar MGF received bids for 40 percent of the shares offered after the Sensitive Index had its worst start to the year in at least three decades. A global sell-off in equities on concern that the U.S. is headed for a recession has reduced or halted planned share sales in the U.S., Europe and Asia.

Demand for shares declined after Indian billionaire Anil Ambani got $190 billion in bids for his Reliance Power Ltd., IPO, which closed on Jan. 18. Reliance Power will begin trading on the National and Bombay Stock Exchanges on Feb. 11.

Citigroup Inc., Goldman Sachs Group Inc., HSBC Holdings Plc, JPMorgan Chase & Co., Merrill Lynch & Co., Enam Financial Consultants Ltd. and Kotak Mahindra Capital Co. advised Emaar on the share sale.

Falling Stocks

Emaar MGF follows Wockhardt Hospitals Ltd., which withdrew its $164 million IPO yesterday after failing to attract enough investors. Emaar had on Jan. 31 trimmed the size of its initial share sale by 8.7 percent.

``The company decided to take this step as a result of the prevailing adverse market sentiments, fuelled by renewed indications of a U.S. recession and global meltdown,’’ Emaar MGF said in a statement e-mailed from New Delhi.

Shares of DLF Ltd. have declined 24 percent since Jan. 1, Unitech Ltd. has fallen 28 percent and Housing Development & Infrastructure Ltd. by about 15 percent, tracking the 23 percent drop in the Bombay Stock Exchange Realty Index.

The developer, a joint venture of Dubai-based Emaar Properties PJSC and MGF Development Ltd. of India, is developing homes, offices, hotels and special economic zones, besides building the capital’s Commonwealth Games village. The sporting event is scheduled to be held in 2010.

Set up in 2005, the company had 12,544 acres of land reserves as of August, and projects in New Delhi, Mohali, Gurgaon, Dehradun, Hyderabad and Pune, the company said in share-sale documents filed with the regulator.

Growing Demand

Real-estate companies raised more than $4 billion last year on increasing demand for property in the world’s fastest-growing major economy after China. DLF, the nation’s biggest developer, raised $2.2 billion in June.

Finance Minister Palaniappan Chidambaram yesterday said India’s $906 billion economy may yet grow close to 9 percent for a third straight year, after government data showed the economy is estimated to slow to 8.7 percent in the year to March 31.

Housing Development & Infrastructure, Puravankara Projects Ltd. and Akruti City Ltd., among other developers, also sold shares last year to meet growing demand in a nation of 1.1 billion people. India could face a shortage of 26.5 million houses by 2012, the government said in December.

Rising demand has also pushed up prices of houses and offices across the country. The cost of purchasing an office in Mumbai’s southern business district of Nariman Point more than doubled in the last two years to 28,000 rupees ($706) a square foot as of Sept., according to Cushman & Wakefield Inc.

``There was some correlation between the stock market and real estate, so to that extent the correction in stock markets would prompt a correction in real estate also,’’ said Shroff of SBI Funds Management.