Property sales in Dubai helped lift Emaar Properties’ first quarter profit by 17 per cent, despite a continuing slump in prices.
Dubai-listed Emaar yesterday posted a net profit of Dh1.2 billion, meeting an average of estimates compiled by Bloomberg, and surpassing the Dh1.03bn the company made during the same period a year ago.
The profit increase came off the back of a 16 per cent hike in revenue, which rose to Dh3.5bn, up from Dh3bn a year earlier. Emaar said the biggest slice of revenue – Dh1.9bn – came from its main business of selling luxury off-plan flats, which recorded a 32 per cent increase on the same period a year earlier.
Most of the property that Emaar sold during the period was in Dubai – Dh4.1bn from a total of Dh5.1bn. It said it had sold 70 per cent more property in Dubai during the first quarter than it did a year ago.
Rents from Emaar’s shopping centres and hotels made up another Dh1.5bn of its revenue, while the company’s international operations led by its Egyptian arm also generated Dh499 million. In Egypt, Emaar said it sold Dh683m of property.
“Property sales in Dubai and other key international markets have gained momentum, a testament to our differentiating strength in offering the right property of choice for investors in premium locations,” said Mohamed Alabbar, the chairman of Emaar.
Last week, ratings agency Standard & Poor’s warned that it expected average house prices in the city to fall by a further 10 per cent this year, with “no sign of improvement on the immediate horizon”.
S&P, which rates Emaar’s bonds, said that after falling between 10 and 13 per cent last year, it expected similar falls this year because of a strong dollar and the low price of oil.
Analysts pointed out that under new accounting rules, Emaar and other property builders are allowed to stagger the revenue recognition from selling off-plan properties over a longer period of time rather than only when the property is handed over to the buyer.
“On the face of it, these results appear very positive and it is clear that Emaar is benefiting from selling a lot of off-plan property during the Dubai property boom in 2012, 2013 and 2014,” said Sanyalak Manibhandu, a senior analyst at the National Bank of Abu Dhabi. “However, with the new accounting rules in place it is not really possible to look at these results as an accurate reflection of the Dubai property market.”
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