Dubai developer Emaar’s profits top Dh2.5bn amid property revival

Profits up 21 per cent, beating analysts’ estimates as new projects including the Address Residence Fountain Views I, II and III; The Address Residence Sky View and Burj Vista in Downtown Dubai were launched.

The Burj Khalifa and on the right Emaar's headquarters in Dubai. Lee Hoagland / The National

Strong perfomance across its malls, property and hotel units helped to push quarterly profits up by 48 per cent at Emaar Properties.

Full-year net income rose 21 per cent to Dh2.56 billion, beating expectations. The Dubai-based company generated Dh756 million in profit in the fourth quarter, capping a bumper year for property, retail and hospitality in the emirate.

Dubai's largest listed property developer said annual sales rose 25 per cent to Dh10.3bn, driven by a 33 per cent increase in revenues for the company's property division to Dh5.5bn as the company benefited from a revival in the Dubai property market last year.

Emaar said the value of its residential sales in Dubai for the full year 2013 was Dh12bn, nearly three times that of 2012 as it launched new projects including the Address Residence Fountain Views I, II and III; The Address Residence Sky View and Burj Vista in Downtown Dubai; The Hills and Vida Residence in Emirates Living; and Palma and Rosa villas in Arabian Ranches.

Emaar’s retail and hospitality businesses also pushed up revenues by 17 per cent to Dh4.8bn as 75 million visitors flocked to the Dubai Mall – 15 per cent more than 2012 and the company benefited from an influx of tourists to its hotels.

Revenues from the company’s global operations in 2013 were Dh1.167bn, representing a further 11 per cent of the total revenue.

“Our strong pipeline of projects, which reflect our commitment to creating long-term value for our stakeholders, will serve as a key growth driver for the company and for Dubai,” said Mohamed Alabbar, the chairman of Emaar Properties.

Emaar said its leasing and retail business recorded a total revenue of Dh3.285bn over the period – 21 per cent higher than the 2012. The Dubai Mall’s 1,200 shops reported a 26 per cent rise in sales during 2013 compared to the previous year.

Meanwhile, its hospitality and leisure business which comprises 12 hotels and resorts consisting of over 1,900 rooms, reported revenues of Dh 1.515bn – up 10 per cent on the previous year. Occupancy levels at The Address Hotels + Resorts remained at around 84 per cent during the year, around the same levels as 2012.

“These are very impressive results and roughly in line with what we were expecting – although beating the Bloomberg average,” said Saleem Khokhar, the head of equities at NBAD’s asset management group. “Both sides of the business appear to be in good health. The increase in revenues from the property side of the business has come from previous sales but will start to appear in Emaar’s bottom line from 2015 to 2017 as these projects start to complete.”

Emaar has long been mulling spinning off its retail business into a separate company which could increase investor returns but would remove a steady income stream from the company which without it would be more exposed to the peaks and troughs of the property market.

The results came as ratings agency Moody’s raised Emaar’s rating two levels to Ba1 from Ba3 – the highest non-investment grade – on Emaar’s “strong” financial performance.

Moody’s said that Emaar had been a “clear beneficiary” of the recovery in Dubai’s real estate market and that “resiliant recurring cash flows from its investment portfolio coupled with the success of its new project launches and reduced gross debt levels has significantly strengthened the credit profile of the company.”

The move follows Standard & Poor’s decision to upgrade Emaar by one level to investment grade or BBB minus on February 5.

Emaar shares rose 1.18 per cent in trading yesterday to a new six year high of Dh8.55 before the results were published.