* First Dubai property IPO since 2009 crash
* Follows spectacular recovery of real estate market
* Company valued at $2.7-3.7 billion
* Shareholders expect to sell up to 18.8 pct of firm
* Books to close on eve of Expo 2020 decision
DUBAI, Nov 14 (Reuters) - Dubai luxury housing developer DAMAC Real Estate launched on Thursday the book-building process for its initial public offer of shares in London, the first IPO by a Dubai property firm since the emirate's real estate crash four years ago.
Companies controlled by DAMAC chairman Hussain Sajwani expect to sell at least $500 million of Global Depositary Receipts and up to 18.8 percent of the firm, plus an over-allotment option of 15 percent of the base offer, DAMAC said in a statement.
Each GDR would represent three ordinary shares; DAMAC set an indicative price range of $12.25-17.25 per GDR, implying a market capitalisation for the company of $2.65-3.74 billion.
Property prices in Dubai plunged over 50 percent during the crash as a bubble burst, putting severe financial pressure on real estate developers and almost causing the emirate to default on its debt.
In the last 12 months, however, the property market has staged a spectacular recovery and residential prices have rebounded over 20 percent, aided by growth in Dubai's trade and tourism sectors and its safe-haven status in a turbulent region.
Prices - and orders for new developments - could rise even further if Dubai, in competition with three other cities, wins its bid to host the Expo 2020 world fair.
The Paris-based Bureau International des Expositions plans to choose the winning bid on Nov. 27; the IPO is expected to close "on or around" Nov. 26, DAMAC said.
The company, which is building a golf course in the emirate with American mogul Donald Trump as well as a Hollywood-themed residential and retail complex, made a profit of $332 million in the first half of 2013, up 57 percent on the whole of 2012.
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.