Homebuyers may be scarce in Dubai, but bargain hunters in the emirate's biggest mall helped profits more than triple at Emaar Properties, the developer of the world's tallest tower. Emaar posted a net profit of Dh760 million (US$206.9m) for the first quarter, up from Dh237m for the same period last year.
The result is a dramatic pickup in fortunes after more than a year of subdued property sales. "Emaar's rental and hospitality portfolio appears to have been the main cause of strength," said Saud Masud, the head of research at UBS in Dubai. "These two segments combined have ramped up well over the last 18 months with revenue contribution increasing from 7 per cent of total sales in 2008 to 25 per cent in 2009."
Last year, Emaar opened two hotels in Dubai: The Address Dubai Mall and The Address Dubai Marina. Meanwhile Dubai Mall, the world's largest shopping centre, attracted 37 million visitors in its first year. Emaar said in a statement that visitor traffic at the Dubai Shopping Festival, which ran for a month from January 28, was up 30 per cent from the previous month. Burj Khalifa, part of the Dh73.4bn Downtown development, opened in January, while the handing over of property in the building was due to begin last month.
Emaar also made progress on residential and commercial developments in Downtown in the first quarter, as well as on Boulevard Plaza and Marina Plaza. "If Burj Khalifa put Dubai and Emaar Properties in the global spotlight and added to our track record in project delivery, the performance of Emaar's business segments highlighted our role as an integrated property developer adding long-term value to our stakeholders," Mohamed Alabbar, the chairman of Emaar, said in a statement.
Moves by Emaar to roll over Dh4.5bn of short-term debt that is coming due over the next 12 months have been seen as positive. "It gives them some breathing room to sort out some of their finances and alleviate some of their near-term liquidity concerns," said Majed Azzam, a property analyst at Al-Futtaim HC Securities, adding that Emaar's income-producing hotels and shopping malls would make it easier to negotiate with banks.
Emaar will focus on its projects in the wider MENA and South Asia regions over the next year. India, where Emaar plans a Dh2.7bn initial product offering, is an integral part of the plan. Emaar's land bank in India comprises 4,589 hectares in 26 cities. Construction contracts for projects in Egypt, Jordan and Saudi Arabia were also issued in the first quarter. Residential property in Egypt and commercial property in Syria are expected to be handed over this year.