Two of the UAE's biggest property developers announced bumper year-end profits yesterday, marking a recovery in the country's hard-hit property market.
Emaar Properties, the UAE's largest listed developer, said its net profits increased 18 per cent to Dh2.1 billion (US$572.3 million) while Abu Dhabi's Sorouh Real Estate, which is soon to merge with rival Aldar, said its net profits were up 32 per cent on the previous year at Dh507.5m.
Both developers put their successful performance down to market recovery and improved performance.
"Last year was one of transformation," said Mohamed Alabbar, the chairman of Emaar Properties. "Emaar capitalised on [Dubai's] resurgence by investing in creating prime real estate assets and strengthening our shopping malls and hospitality businesses."
Sorouh reported revenues of Dh3bn- a fall of 21 per cent on the Dh3.8bn it made the previous year.
"Sorouh's delivery pipeline for 2013 is very strong, with over 7,000 units coming to market," added Abubaker Seddiq Al Khouri, Sorouh's managing director. "These deliveries will strengthen cash flow and improve profitability."
However, both developers reported flagging sales figures brought about by changes in their respective business models.
Sorouh said its lower sales figures were because its business had moved from mostly selling homes in 2011 to constructing state-funded villas last year in Al Watani, Al Ghuraibah in Al Ain and Al Silla in the Western Region as part of a national housing plan.
The company added that it received a payment of Dh700m from the Government during the fourth quarter of last year for flats at its 3,500-apartment complex The Gate on Reem Island as the first instalment of a Dh3.2bn payment announced at the time of its merger agreement.
"Sorouh's debt issues are behind it now," said Nabil Farhat, a partner at Al Fajer Securities in Abu Dhabi. "Its results are good and it is waiting for the merger with Aldar to complete and the 7,000 more homes which it will deliver this year are likely to be a major booster for revenues."
Emaar said that its sales of Dh8.2bn were 2 per cent higher than the Dh8.1bn booked the previous year as the company turned much of its attention from house building to retail and hospitality.
The company said that about half of its revenues - Dh4.1bn - came from its shopping malls and hotels business last year rather than from selling villas and apartments.
Analysts added that Emaar's 18 per cent profit increase was mainly the result of a one-off hit the company had taken for 2011 regarding its holdings in Dubai Bank, which reduced profits the previous year.
"If you exclude last year's provisions taken out against Dubai Bank of Dh264 million then Emaar 2012 profits growth is actually closer to 3 per cent," said Saleem Khokhar, the head of equities at National Bank of Abu Dhabi. "Also profit margins in the last three months of the year fell from 53 per cent to 43 per cent so the company is making less profit now than during the previous quarter."