Emaar Properties shook off the Dubai real estate slowdown as it boosted profit from the sale of homes across a raft of developments including the new Opera District.
Second-quarter net profit rose 8 per cent to Dh1.2 billion compared to a year earlier as revenue rose 7 per cent to Dh3.7bn.
In the first half of this year, net profit was up 12 per cent to Dh2.4bn compared to the same period last year as revenue climbed 11 per cent to Dh7.2bn.
The company said that over the six-month period, recurring revenue from its retail, hospitality and leisure arm comprised 40 per cent of its total at Dh2.92bn. This is slightly ahead of the Dh2.9bn generated last year, although its share of last year’s revenue was 45 per cent.
Sales of Dubai properties were 45 per cent higher at Dh8.85bn because of the launches of The Address Residences Dubai Opera and Il Primo towers at the new Opera District in Downtown Dubai, the Fairway Vistas and Sidra villas communities at Dubai Hills, the 52/42 towers at Dubai Marina and the Harbour Views towers at Dubai Creek Harbour. Emaar now has a backlog of projects to be delivered over the next three to four years with a value of Dh45.9bn.
Revenue from its international operations was Dh1.03bn – 14 per cent of the total, but a 12 per cent decline on the Dh1.17bn generated in the same period a year earlier.
The property development arm registered a 20 per cent increase in revenue to Dh4.3bn, while the total amount of properties sold during the period equated to Dh10.4bn – 23 per cent higher than last year. Mohamed Alabbar, the chairman of Emaar Properties, said that the results highlighted the success of its strategy to consolidate its position as the biggest developer in Dubai, and to build its recurring revenue base.
“We are in one of the most exciting phases of our growth strategy having launched a brand new icon for the city – The Tower at Dubai Creek Harbour – and the imminent roll-out of Dubai Opera in Downtown Dubai,” he said.
“We are scaling up our malls business with the launch of a retail district in Dubai Creek Harbour and the expansion of Dubai Mall. We are also strengthening our hospitality portfolio with 35 new hotels and serviced residences in the UAE and international markets.”
The company’s shares closed almost 1 per cent lower at Dh6.82 a share, but in the year to date have climbed by almost 20 per cent, giving it a market cap of just below Dh49.2bn.
The second-quarter net profit figure of Dh1.27bn beat estimates of Dh1.06bn from analysts at Bahrain’s Securities & Investment Co, and of Dh1.21bn by NBAD Securities.
Sanyalak Manibhandhu, the head of research at NBAD Securities, said that his company was upgrading its recommendation for Emaar Properties from “accumulate” to “buy”, and had increased its target price to Dh8.25, up from Dh7.15 previously.
This upgrade was based on the company’s enlarged backlog, the likelihood of higher recurring revenue from new investment properties, and the increased revenue potential through the development of Dubai Creek Harbour.
He also pointed to an upgrade by ratings agency Moody’s on Emaar’s long-term debt to Baa3, which he said highlighted “the developer’s ability to create sustained shareholder value through ongoing projects and recurring revenues from malls and hospitality businesses”.
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