Blame it on the Burj. The slow delivery of homes in Dubai's Burj Khalifa, the tallest tower in the world, was the main drag on Emaar Properties's profits for the second quarter. The Dubai developer's share price fell 3.56 per cent yesterday to Dh3.25 as investors responded to news that its net profit for the quarter came in at Dh802 million, as opposed to the Dh958m forecast by analysts.
"The reason for this is purely down to the slower than anticipated delivery of units in the Burj Khalifa," said Chet Riley, an analyst at Nomura. While the Burj Khalifa opened in January, the process of handing over apartments only began in the second quarter, with 24 per cent of the units filled by the end of last month. The Nationalreported in May that Emaar had moved to repossess homes of those buyers who were in default of their payments. "I don't see any significant defaults coming from the Burj Khalifa," added Mr Riley. "So those sales revenues will be recognised at some point this year, it's just a question of timing."
Nabil Ahmed, an analyst at Deutsche Bank, said despite investors' disappointment, Emaar was still "in a relatively nice position". "If you look into details it doesn't change anything," Mr Ahmed said. "It really looks as if it's just the timing of the units' handover there's going to be more handovers in quarter three, so at the end of the day they'll have the same revenues for 2010." He said the onus was now on the successful completion of properties the developer sold in the past.
"They just have to make sure that they will also properly execute projects in the other markets they are active in, which are fundamentally much sounder, such as Egypt, Saudi Arabia and Pakistan," Mr Ahmed said. Emaar is also among the few stocks on the Dubai Financial Market (DFM) likely to attract institutional investors at the moment due to its large investment portfolio and comfortable balance sheet.
"It is the most liquid stock in DFM, so if you do see any flows coming into the market, you'll see them going into Emaar," Mr Riley said. firstname.lastname@example.org