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Dubai's Emaar 3Q Net Pft -34% As Expenses Grow, Sales Slow

Sunday, Oct 30, 2011

(This story was originally published Thursday.)

-- Emaar 3Q net profit drops 34% as sales slow, expenses grow

--Shopping mall business experiences robust growth

-- Emaar handed over 712 units in the first nine months of the year

DUBAI(Zawya Dow Jones)--Dubai-based Emaar Properties (EMAAR.DFM), the Middle East's largest home builder, posted a 34% drop in third quarter net profit as sales slowed and expenses increased.

Emaar , in an emailed statement Thursday, said net profit in the three months to Sept. 30 amounted to 406 million U.A.E. dirhams ($110 million), down from AED612 million a year ago.

The result still beat the AED387 million effort that analysts at Shuaa Capital had expected but was short of the AED454 million result that analysts at Kuwait-based Global Investment House had predicted.

Dubai's once thriving real estate sector has seen prices and rents slump since late 2008 when the global economic downturn first took hold. Despite some evidence that Dubai's secondary market has since stabilised, analysts still expect house prices to fall by as much as 20% in the next year as incoming supply remains substantial even despite numerous project cancellations and delays.

Some analysts attributed Emaar 's year on year third quarter profit decline to a shift in the company's business focus.

"The business is transitioning from being a property seller to an owner and operator of retail and hotel assets in Dubai. The shift in revenue mix is a natural product of that trend," said Mohammad Kamal, an analyst at Arqaam Capital.

Emaar said its performance in the first nine months of 2011 was aided by a sustained growth at its hospitality and leisure subsidiaries as well as shopping malls and retail units.

"The shopping malls business of Emaar recorded robust growth in revenue during the first nine months of 2011 with the total rental and related revenue for the period being approximately AED1.6 billion," Emaar said.

The continued demand for homes and commercial space within its established communities such as Downtown Dubai, and the hand-over of prime real estate assets in international markets, including Turkey, Jordan and Syria also contributed positively, it added. The developer handed over 712 units in the first nine months of 2011.

Residences in several Emaar master-plan developments in Saudi Arabia and Egypt--two of the biggest markets in terms of demand for affordable luxury homes--will be handed over shortly, adding to the company's revenue stream in coming months, said Emaar .

" Emaar 's focus on emerging markets and further driving its profitable subsidiaries is strategic, and in line with our commitment to offer long-term value for our stakeholders," the firm's chairman Mohamed Alabbar said.

Emaar shares closed up 4.8% at AED2.60 in an overall positive market Thursday.

-By Tahani Karrar-Lewsley, Dow Jones Newswires; +9714 446-1692; tahani.karrar@dowjones.com

Copyright (c) 2011 Dow Jones & Co.

(END) Dow Jones Newswires

30-10-11 0351GMT