29/10/2014 18:55 AST
Emaar Properties reported a 21 per cent rise in net profit for the third quarter as it completed the share-sale of its retail business.
But net income missed analyst expectations as the Dubai developer, which hived off Emaar Malls Group this month, recorded a second consecutive quarter of declines in revenue.
“Revenues are down because of a slowdown in property deliveries during the quarter,” said Taher Safieddine, assistant vice president of equity research at Shuaa Capital, a Dubai-based investment bank. “The third quarter was very slow in terms of deliveries, especially in Dubai.”
Profit for the quarter ended September 30 rose to Dh701 million from Dh581m, while revenues in the same period declined to Dh1.97 billion from Dh2.34bn.
“In this business, the real estate developers can experience some volatility,” said Sebastien Henin, head of asset management at The National Investor, an Abu Dhabi-based investment bank. “If you’re late to launch a project and the deliveries come at a bad time you can find surprises because of the cyclical nature.”
Emaar announced several high- profile developments this year, encouraged by a return of confidence in the market. In addition to project launches such as BLVD Heights and Opera Grand in Downtown Dubai, it is also developing the vast Dubai Creek Harbour in partnership with Dubai Holding. It said the total sales value of its Dubai projects topped Dh10.5bn over the first nine months of the year.
But the third quarter decline in sales reflects a wider slowdown in the emirate’s property market after a series of measures introduced by the authorities to curb speculation and avert another bubble.
Shares of Emaar Properties were unchanged at Dh10.35 on the Dubai Financial Market exchange yesterday. The results were distributed after the 2pm market close.
“They just missed analyst expectations but in my mind it’s below market expectations, which was something similar to Q1 and Q2,” said Mohammed Ali Yasin, the managing director at NBAD’s brokerage arm. “It probably explains why the share price was trading at this level. These results are not going to be supporting the share price or the market, but I don’t think it will have a negative impact either.”
The third quarter was marked by the summer, Ramadan season and Cityscape, the industry’s bellwether exhibition.
“Selling of units was very strong at Cityscape, but those kinds of sales will only be realised once they deliver,” Mr Yasin said.
Emaar also took a one-time impairment of Dh57m related to Amlak, the mortgage financier and an associate of the Dubai developer, which relates to provisions made as per the restructuring arrangements for Amlak’s debtors.
Amlak, which has been suspended from trading since November 2008, in August reached an agreement with 28 creditors over $2.7bn of debt amid hopes to relist on the Dubai Financial Market next year.
Emaar, the developer behind the world’s tallest skyscraper, raised Dh5.8bn in the public share-sale of its shopping malls unit. The company received orders worth Dh172bn, making it more than 30 times oversubscribed by regional and foreign investors and 20 times by retail investors. Shareholders of Emaar will receive Dh9bn from the proceeds of the IPO for Emaar Malls Group, after receiving Dh7bn in cash and stock dividends for the year 2013.
The developer is “on track” with regard to the hiving off its hospitality unit, the chairman Mohamed Alabbar told reporters this week. The developer also plans to offer its Egyptian unit in an IPO by June next year, Mr Alabbar added.
The National
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