The tills may still be ringing and the droves of tourists still arriving, but Dubai’s retail juggernaut showed signs of slowing slightly yesterday as fourth-quarter profit at the emirate’s largest shopping centre owner missed analysts’ expectations.
Profit for the quarter ended December at Emaar Malls Group, which owns Dubai’s largest shopping centre, The Dubai Mall, stood at Dh435 million, up 5.5 per cent compared with a year earlier.
Although the profit was up, it was still lower than analysts’ forecasts, missing Bloomberg’s consensus of Dh455m.
It prompted suggestions that a market slowdown influenced by oil price falls and the strong US dollar is putting the brakes on the mega mall’s recent massive growth.
Rents from Emaar Malls’ 6 million square feet portfolio of malls in Dubai – The Dubai Mall, Souq Al Bahar, Dubai Marina Mall and Gold & Diamond Park – rose to Dh821 million, up by 3 per cent on the same period a year earlier. Sales, marketing and general expenses for the quarter stood at Dh116m, 6 per cent higher than for the same period the previous year and again missing analysts’ expectations.
The increases came as a total of 124 million visitors flocked through the doors of the malls last year – the equivalent of 50 times the entire population of Dubai and a 9 per cent increase on the previous year.
Emaar Malls said that 80 million people alone visited The Dubai Mall last year, the highest number in the world for any shopping and leisure centre.
Full-year profit came in at Dh1.65 billion, 2.4 per cent lower than analysts’ estimates, but still 23 per cent higher than the previous year. Full-year rents were also up 11 per cent compared with the previous year at Dh2.99bn.
“The retail sector is a key contributor to Dubai’s GDP and Emaar Malls’ assets mark a significant contribution to defining our city as must-visit destination for retail and leisure,” said Mohamed Alabbar, the chairman of Emaar Malls and Emaar Properties.
Emaar Malls’ share price fell by 3.4 per cent during trading yesterday to close at Dh2.49.
Figures from the Dubai Economy Tracker show that Dubai’s economy grew at its slowest pace for more than five years in December as low oil prices and the strong US dollar took their toll.
The number of high-spending Russian visitors splashing their cash at The Dubai Mall has also fallen dramatically. According to Dubai Tourism, the number of tourists coming to Dubai from Russia, CIS and the eastern European region dropped by 22.5 per cent last year compared with 2014.
“Profits are slightly lower than we expected and costs are slightly higher than consensus, which is something we are putting down to the effect of low oil prices and the strong dollar,” said Saleem Khokhar, the head of fund management at National Bank of Abu Dhabi. “However, in general these are still very good results and do not give us any concerns for the long term.”
Last year, the real estate group JLL predicted that about 403,000 sq metres of new mall space will be completed this year, which will prompt retail rents in the city to start to fall.
lbarnard@thenational.ae
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NYBL PROFILE
Company name: Nybl
Date started: November 2018
Founder: Noor Alnahhas, Michael LeTan, Hafsa Yazdni, Sufyaan Abdul Haseeb, Waleed Rifaat, Mohammed Shono
Based: Dubai, UAE
Sector: Software Technology / Artificial Intelligence
Initial investment: $500,000
Funding round: Series B (raising $5m)
Partners/Incubators: Dubai Future Accelerators Cohort 4, Dubai Future Accelerators Cohort 6, AI Venture Labs Cohort 1, Microsoft Scale-up
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Graphene can also detect cancer cells in the early stages of the disease.
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Director: M. Night Shyamalan
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The specs
Engine: 2.7-litre 4-cylinder Turbomax
Power: 310hp
Torque: 583Nm
Transmission: 8-speed automatic
Price: From Dh192,500
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Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
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The specs
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Power: 201hp at 5,200rpm
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