Emaar Properties, the UAE's largest property developer, recorded a second-quarter net loss of Dh1.29 billion (US$350 million) as a result of a write-down of its business in the US, John Laing Homes. The company said the slowdown in the US market forced it to write down the complete book value of John Laing, which it bought in 2006 for Dh3.85bn, to Dh1.72bn "in order to be conservative in accounting for such an investment".
The net loss for the quarter was against a net profit of Dh2.11bn for the same period last year. Emaar, which is nearing completion on Burj Dubai, the tallest building in the world, said net operating profit for the second quarter rose to Dh442m from Dh237m in the first quarter thanks to higher unit deliveries and increased sales of completed properties. Net operating profit for the first half of the year fell to Dh679m from Dh3.1bn last year.
Mohammed Alabbar, the chairman of Emaar, said: "The first half of the year was extremely challenging as we steered the company through new market realities." Property companies across the UAE are feeling the effect of the financial crisis, with property prices falling by about 40 per cent since last October and sales also on the decline. Big firms are consolidating in an effort to streamline operations, cut costs and better manage the construction of their projects.
Mr Alabbar referred to the planned merger between Emaar, Dubai Properties, Tatweer and Sama Dubai as a "highlight of the first half of the year". Talks on the merger are expected to finish in October. "The discussions are led by a shared vision for potentially creating a world-class real estate group that will support the evolution of Dubai as a global hub for business," Mr Alabbar said. Earlier this month, Emaar Economic City, Emaar's Saudi Arabian subsidiary, revealed a second-quarter net loss of 113.1 million riyals (Dh110.9m), up from a loss of 40.4m riyals in the same quarter last year.
The company is developing the King Abdullah Economic City project on Saudi Arabia's Red Sea coast. Despite the losses and the slowdown in global demand for property, Emaar plans to continue with most of its ventures abroad, with key markets being Saudi Arabia, Jordan and Syria. However, the company closed its office in Algeria last month because of a lack of progress on its developments in the country.