Dubai's Emaar Properties posts 43% rise in Q1 profit after strong sales

'Effective management of operational efficiencies' pushed revenue for the quarter to $1.71 billion

Emaar Properties, which built the Burj Khalifa, says it is in a position to increase sales, lift profitability and drive customer happiness and shareholder value. Photo: Emaar

Emaar Properties, Dubai's largest listed developer, reported that its first-quarter profit surged 43 per cent after strong real estate sales and operations across its units.

Net profit for the three-month period ended in March rose to Dh3.2 billion ($871 million), from Dh2.24 billion a year ago, the company said in a statement to the Dubai Financial Market, where its shares are traded.

Revenue for the quarter reached at Dh6.3 billion ($1.71 billion), down 5 per cent a year from Dh6.64 billion.

Emaar's property sales backlog hit Dh55.7 billion, which it said will be recognised as revenue in the coming years.

Earnings before interest, taxes, depreciation and amortisation (ebitda) for the first quarter rose 26 per cent to Dh4 billion, from Dh3.2 billion a year earlier, as company "innovation, talent and operational excellence" sustained its operations.

Shares in Emaar — which is best known for building Burj Khalifa in Dubai, the world's tallest building — settled flat at Dh5.96 at the close of trading on the DFM on Thursday.

"Emaar's financial performance during the first quarter demonstrates our capability to continually enhance our performance through effective management of its operational efficiencies," said Mohamed Alabbar, founder of Emaar Properties.

"The company is in a position to increase sales, lift profitability and drive customer happiness and shareholders value."

Dubai's property market has continued its recovery from the Covid-19 pandemic, boosted by renewed interest from investors and buyers.

The industry had a record-breaking year in 2022, registering 90,881 transactions, exceeding the previous high of 81,182 in 2009, property consultancy CBRE said in its recent Dubai Residential Market Snapshot report.

Business activity in Dubai's non-oil private sector economy rose to an eight-month high in April, boosted by a sharp rise in sales and new orders as demand growth quickened, the emirate's seasonally adjusted S&P Global purchasing managers' index showed this week.

Emaar, whose portfolio includes tourism, retail and hospitality industries, stands to benefit from the expected robust growth in these sectors in 2023, which will help Dubai achieve its long-term growth objectives.

“A surge in sales momentum in the travel and tourism and wholesale and retail sectors helped send the Dubai PMI to an eight-month high … signalling a robust improvement in the health of the non-oil economy,” said David Owen, a senior economist at S&P Global Market Intelligence.

Emaar has made moves to boost its strategy. At last week's Arabian Travel Market, Emaar Hospitality Group said it will open eight new hotels in the UAE, Saudi Arabia and Egypt, with most scheduled to open in the second half of the year or in 2024.

In December, the developer increased its share capital by 8 per cent to Dh8.83 billion and issued 8 per cent more shares, to bring its total to 8.83 billion.

Last year, Emaar also increased the foreign ownership limit of its shares to 100 per cent, from 49 per cent, to capitalise on high interest from international investors.

Emaar Development, the company's build-to-sell property development business majority-owned by Emaar Properties, posted flat profit in the first quarter of 2023, inching up 1 per cent to Dh1.06 billion, from Dh1.05 billion a year ago.

The unit contributed Dh2.38 billion in revenue, down by a third year on year, and Dh1.14 billion in ebitda, down by 9 per cent from the same period a year ago.

The division's results were good because it was able to improve on operational efficiencies, Mr Alabbar said.

"Our backlog demonstrates a healthy market demand across our key markets, and we remain appropriately positioned to deliver constant growth and sustained value for our shareholders," he said.

Emaar International, the group's overseas arm, posted revenue of Dh420 million, representing about 7 per cent of total revenue, on the back of property sales of about Dh627 million.

This was primarily driven by the unit's profitable operations in Egypt, it said.

Emaar's shopping mall, retail and commercial leasing operations posted revenue of Dh1.4 billion, up 7 per cent from a year ago.

The company's hospitality, leisure and entertainment businesses recorded a 17 per cent year-on-year growth in revenue, hitting Dh884 million in the first quarter, driven by the tourism sector's rebound and high domestic spending, it said.

UAE hotels under Emaar's hospitality division posted average occupancy of 75 per cent during the first quarter.

"Dubai continues to lead as a business hub for trade, financial services, logistics, travel and hospitality, with growth in emerging sectors such as technology, renewable energy, health care and education," Emaar said.