Emaar makes recovery prediction
Dubai's property market is slowly stabilising after home prices slumped by over 60 percent from their peak in 2008
July 29, 2012 8:36 by Reuters
Emaar Properties, builder of the world’s tallest tower, said its quarterly profit more than doubled on Sunday as a one-off impairment cost was not repeated and income from malls and hotels grew.
Dubai’s largest developer, which saw profits rise for the third straight quarter, has shifted its focus in recent years away from the emirate’s battered property market and toward its more profitable retail and hospitality business.
But the company’s chairman predicted a rebound in the property sector in the emirate, where it also owns what is billed as the world’s largest shopping mall.
“The real estate market in Dubai is turning around,” said Mohamed Alabbar, chairman of Emaar Properties. “Emaar’s financial results for the first half of the year reflects the growing strength of Dubai’s economy,” he said.
Dubai’s property market is slowly stabilising after home prices slumped by over 60 percent from their peak in 2008.
Foreign investors bought real estate assets worth 28.3 billion dirhams in the first half of 2012 compared to 20.8 billion dirhams a year earlier, data released by Dubai’s land department at the weekend showed.
On Sunday, Emaar said it made net profit of 614 million dirhams ($167 million) in the three months to June 30, up from 250 million dirhams in the year-earlier period.
In the second quarter last year, Emaar wrote off its 172 million dirham investment in Dubai Bank. The government took over the lender last year and merged it Emirates NBD.
Three analysts had forecast average profit of 516.33 million dirhams, in a Reuters poll.
Revenue for the quarter was 2.1 billion dirhams compared to 2.03 billion dirhams in the second quarter of 2011. Costs declined by 9 percent to 965 million dirhams.
“The bottom line for the quarter came in stronger than our forecasts and consensus expectations which, in our view, is likely to support Emaar’s share performance in the short term,” said Jan Pawel Hasman, vice president for equity research at investment bank EFG Hermes.
RETAIL, HOTELS GAIN
Emaar, which built the Burj Khalifa tower and is developing Armani-branded hotels, said its rental, retail and hospitality business contributed more than half of its six-month revenues.
Revenue from its retail business was 1.3 billion dirhams in the first half of 2012, up 23 percent from a year earlier.
Chairman Alabbar said earlier this year that Emaar would focus on boosting revenues from its global operations and enhancing profit from recurring revenues.
However, Emaar’s international operations accounted for just a11 percent of its half-year revenues, as the company delivered units in Turkey, Egypt, Saudi Arabia and Lebanon.
The developer said it would pursue business in India, Saudi Arabia, Morocco, Pakistan, Syria, Turkey, Egyptand Jordan.
It drew strong demand when it issued a $500 million seven-year Islamic bond, or sukuk this month, a sign that investor confidence in Dubai is returning as state-owned firms repay their debts.
Ahead of the earnings, Emaar shares ended down 0.3 percent on the Dubai market which closed 0.05 percent lower. On the year, the stock is up 26.5 percent.