Emaar Properties chairman has predicted a rebound in the property sector in Dubai.
“The real estate market in Dubai is turning around,” said Mohamed Alabbar, chairman of Emaar Properties. “Emaar’s financial results for the first half of the year reflects the growing strength of Dubai’s economy,” he said.
Dubai’s property market is slowly stabilising after home prices slumped by over 60 percent from their peak in 2008.
Foreign investors bought real estate assets worth Dh28.3 billion in the first half of 2012 compared to Dh20.8 billion a year earlier, data released by Dubai’s land department at the weekend showed.
On Sunday, Emaar said it made net profit of Dh614 million ($167 million) in the three months to June 30, up from Dh250 million in the year-earlier period.
In the second quarter last year, Emaar wrote off its Dh172 million investment in Dubai Bank. The government took over the lender last year and merged it Emirates NBD.
Three analysts had forecast average profit of Dh516.33 million, in a Reuters poll.
Revenue for the quarter was Dh2.1 billion compared to Dh2.03 billion in the second quarter of 2011. Costs declined by 9 per cent to Dh965 million.
“The bottom line for the quarter came in stronger than our forecasts and consensus expectations which, in our view, is likely to support Emaar’s share performance in the short term,” said Jan Pawel Hasman, vice president for equity research at investment bank EFG Hermes.
Emaar, which built the Burj Khalifa tower and is developing Armani-branded hotels, said its rental, retail and hospitality business contributed more than half of its six-month revenues.
Revenue from its retail business was Dh1.3 billion in the first half of 2012, up 23 percent from a year earlier.
Chairman Alabbar said earlier this year that Emaar would focus on boosting revenues from its global operations and enhancing profit from recurring revenues.
However, Emaar’s international operations accounted for just a11 percent of its half-year revenues, as the company delivered units in Turkey, Egypt, Saudi Arabia and Lebanon.
The developer said it would pursue business in India, Saudi Arabia, Morocco, Pakistan, Syria, Turkey, Egyptand Jordan.
It drew strong demand when it issued a $500 million seven-year Islamic bond, or sukuk this month, a sign that investor confidence in Dubai is returning as state-owned firms repay their debts.
Ahead of the earnings, Emaar shares ended down 0.3 per cent on the Dubai market which closed 0.05 percent lower. On the year, the stock is up 26.5 per cent.
(Report from Reuters)