Dubai's Emaar first-half profit surges 15% on higher sales

The company's founder credits strong return on investments with driving growth

Emaar's first-half profit rises as Dubai's real estate sector recovers from the coronavirus pandemic. Chris Whiteoak / The National

Emaar Properties, Dubai's largest listed developer, reported a 15 per cent surge in its first-half profit amid higher property sales.

Net profit for the six months to the end of June climbed to Dh4.9 billion ($1.3 billion), the company said in a statement on Thursday to the Dubai Financial Market, where its shares are traded.

“Emaar's recent performance reflects our continuing commitment to sustained profitable growth and our focus on meeting the needs of our loyal and new customers,” Mohamed Alabbar, founder of Emaar said.

“Our investments have resulted in strong returns, driving our growth and improving our operations. We are confident in our ability to continue executing our business strategy and meeting customer demand as we move forward in the year.”

Emaar achieved first half group property sales of Dh20.2 billion, a 14 per cent annual growth.

Revenue for the period, however, dropped 10 per cent to Dh12.2 billion, while other income rose 89 per cent to Dh919 million.

The cost of revenue for the first half slid 18 per cent annually to Dh5.5 billion. Selling, marketing, general and administration and other expenses also fell 6 per cent to Dh1.3 billion boosting the profit of the company.

The company's revenue backlog from property sales reached around Dh63 billion as of June 30, which represents “future revenue from property sales to be recognised over the next few years,” Emaar said.

Emaar could generate Dh485 billion ($132.15 billion) from the sale of its development portfolio by 2040, as the company continues to dominate the emirate's real estate market, according to investment bank EFG Hermes.

About Dh155 billion, or 32 per cent of the total portfolio, will be sold in the coming five years, according to its estimates.

Dubai's property market has made a strong recovery from the coronavirus-induced slowdown on the back of government initiatives such as residency permits for retirees and remote workers, as well as the expansion of the 10-year golden visa programme and the economic gains generated by Expo 2020 Dubai and higher oil prices.

Dubai is the world's top market for $10 million homes as sales hit $3.1 billion in the first half of the year, edging past Hong Kong and New York, according to global property consultancy Knight Frank.

In the first six months of this year Dubai accounted for 79 per cent of all homes sold for $10 million or more, according to the consultancy.

Average prices in Dubai's residential market increased by 16.9 per cent in the year to June, with apartment prices up 17.2 per cent and average villa prices rising by 15.1 per cent, according to a recent report by consultancy CBRE.

As of June, average apartment prices stood at Dh1,294 per square foot while average villa prices were at Dh1,525 per square foot, it said.

Emaar Development, a majority-owned subsidiary, achieved property sales of Dh19 billion during the first half, a growth of 25 per cent compared to the first half of last year. UAE's build-to-sell operation reported first-half revenue of Dh6.3 billion and launched 16 new projects in the UAE.

Emaar's shopping mall, retail, and commercial leasing operations reported an 8 per cent annual jump in revenue to Dh3.1 billion, according to the statement.

Emaar's international real estate operations' property sales, meanwhile, reached Dh1.2 billion, with revenue totalling Dh1.3 billion during the first half, driven by operations in Egypt and India. Revenues from international real estate operations represent 11 per cent of Emaar's total revenue, it said.

Emaar's hospitality, leisure, and entertainment divisions generated Dh1.6 billion in revenue, marking an 18 per cent increase from the first half of last year amid the steady recovery in the tourism industry and strong domestic spending.

The number of international visitors to Dubai exceeded pre-pandemic levels in the first half of this year, as the emirate's hospitality and tourism sector posted a record performance.

International visits to Dubai rose 20 per cent during the first half of the year as compared to the same period in 2022, with the emirate welcoming 8.55 million international visitors between the start of January and the end of June, the Dubai Media office said on Sunday, quoting the latest data from the Dubai’s Department of Economy and Tourism.

This marks Dubai's best first-half performance yet, topping the previous high of 8.36 million tourists in the first half of 2019.

Emaar's recurring revenue from malls, hospitality, leisure, entertainment, and commercial leasing rose 11 per cent annually to Dh4.7 billion during the first half, the company said.