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Real Estate rout
Quarter four results are out for the Real Estate sector. To put it gently, things have definitely looked better
February 14, 2011 5:17 by Eva Fernandes
If we’ve said if once, we’ve said it at least a hundred times before, the property market in the UAE is, to put it lightly, troubled (though phrases like ‘massively oversupplied’ and ‘in severe debt’ also come to mind). Anyway, with the fourth quarter results out from a few of the usual favourites of the sector, Kipp gives you a quick round up:
There was somewhat shocking news this week, when Abu Dhabi’s second largest developer Sorouh Real Estate posted a Dh199 million loss for Q4 2010, a significant drop from the Dh28.1million profit it report in its Q4 2009 report. Failure to deliver key projects is a part of the reason for the loss. In particular the Sun and Sky Towers on Reem Island, which were meant to be delivered nine months ago, are now expected to be delivered by the end of the first quarter of 2011.”I think the most significant thing now is delivery,” said Richard Amos, the chief financial officer of Sorouh. “We are moving into a phase of delivery and can bear the fruit of all the investment we have put into the business.” So thinks will be okay, they hope.
Emaar: This quarter, Emaar reported a thundering 62 percent drop in its profits. Part of the problem, the report shows, is the rising cost of doing business for the developer. In its annual report, Emaar showed that its cost of revenues rose by 69 percent to Dh2.6 billion. But then again, as The National rightly pointed out, Emaar is still considered to be quite healthy because of its strong revenues from hotels and malls: In 2010 Emaar’s mall, retail and hospitality subsidiaries counted for 24 percent of total revenues.
Aldar: In arguably one of the bigger shock of the year, Aldar, the biggest property developer in Abu Dhabi, which had already stunned everyone late last year when it revealed its billion dirham debt, has also just released its full year results for 2010. What is the damage? Aldar reported a loss (after recognizing the impairment and fair value losses) of $3.46 billion, which is a far cry away from its $228 million profit reported in 2009. Depressing as the news is, it comes as no surprise. After all, Aldar has reported losses for five straight quarters and its shares have fallen 55 percent over the past 12 months.
So there you have it. Bad news but no death knells yet – just some more stormy weather. We’ll try and bring you more cheery news next time, but if it’s a real estate story, we’re not making any promises.