A spike in the value of sales of new residential property in Dubai helped lift first-quarter profit for developer Emaar amid what its chairman calls a positive economic environment in the emirate.
The developer said that its preliminary net profit for the first three months was 15 per cent higher than in the equivalent period last year – to Dh1.38 billion from Dh1.2bn a year earlier – beating the expectations of analysts at NBAD Securities.
New residential launches in the Downtown and Marina areas, as well as joint-venture projects at Dubai Hills Estate, Dubai Creek harbour and Emaar South, helped catapult the value of sales to Dh6bn in the first quarter, a 44 per cent jump compared with Dh4.19bn a year earlier.
Emaar said it has a backlog of Dh46.2bn to be recognised as revenue in the next few years.
“We have seen an increase in property sales in Dubai, and we are on track with our construction milestones,” said Mohamed Alabbar, the chairman of Emaar Properties. “Emaar’s performance underpins the positive economic environment of Dubai.”
Earlier this month, the IMF forecast that Dubai’s economy would grow by as much as 4 per cent this year, compared with an average of 2.3 per cent across the Mena area, thanks to an improvement in global trade and increased government spending in the run up to Expo 2020.
However, recent reports on the performance of Dubai’s residential market have indicated that sales and rents are continuing to decline, largely as a result of economic uncertainty. Cluttons said in its Spring Market Outlook that house prices remain 7.8 per cent lower than a year ago and transaction volumes in the market for completed homes is 18.4 per cent lower.
Mr Alabbar said that “along with our core business of creating premium real estate in Dubai and other international markets, our malls, hospitality and leisure businesses have also recorded growth”.
Business activities across the board resulted in a 15 per cent boost in preliminary revenue in the first quarter to Dh4bn – above NBAD Securities’ estimate of Dh3.8bn and Bloomberg’s average forecast of Dh3.9bn.
Malls and hospitality made up 39 per cent of that figure, although those operations had little revenue change year-over-year at Dh836 million during the period.
First-quarter profit at its Emaar Malls unit rose by 1.9 per cent to Dh539m from Dh529m a year earlier, with expansions in the works for The Dubai Mall’s Fashion Avenue as well as new attractions along the Boulevard, Fountain Views and Zabeel areas.
Emaar’s revenue from the hospitality sector increased by 5 per cent to Dh756m, partially thanks to the launch of two hotels in the first quarter, including the Address Boulevard and Rove Healthcare City.
The Address-branded hotels had an average occupancy of 92 per cent during the period. Emaar has 26 hospitality projects in the pipeline including in the UAE, Turkey, Egypt, Saudi Arabia and Bahrain.
Analysts at NBAD Securities, led by Sanyalak Manibhandu, the head of research, said in a note that it may revise higher its 2017 forecast for Emaar.
“Dubai’s attractiveness as a regional venue for conducting business and spending leisure time, Emaar’s brand equity, the company’s status as the only stock market-listed Dubai master developer, the scale of its premium land bank and the mix of recurrent and non-recurrent revenue and profit sources support the equity investment case,” the note said.
Emaar shares fell 0.4 per cent at Dh7.46 in Dubai trading on Sunday.
lgraves@thenational.ae
Follow The National's Business section on Twitter