Growth projections come on the back of the booming property market, the company’s land bank and its involvement in the construction chain.
The chief executive of Dubai Investments expects the conglomerate’s profit to more than double this year, thanks in part to Expo 2020.
In an interview yesterday, Khalid bin Kalban predicted that the group’s profit will exceed Dh800 million by the end of 2013. That would mark a near-150 per cent growth from 2012.
Mr bin Kalban’s growth projections come on the back of the country’s booming property market, his company’s land bank and its involvement in the construction chain.
“We will be focusing on development because we have a land bank across the UAE, in Abu Dhabi, Dubai, Sharjah and Fujairah,” said Mr bin Kalban, who is also the company’s managing director.
“We are an investment company but we have a big land bank as a group, spread throughout different companies. I think real estate will be, for the next two years, our focus because we think the market is going to grow, anticipating the story six years hence – Expo 2020.
“We are now in a better position than most companies because of the real estate land bank and companies in our group that manufacture building materials. We think there will be an increase in the construction activity and we will be part of it.”
The company invests in joint ventures and local companies, and has around 40 subsidiaries. It has interests in property developers, glass manufacturers, building materials, pharmaceuticals and aluminium extrusions. The move into development will tap into the profits offered down the construction chain provided it can deliver on the projects in key areas.
“DI own Dubai Investment Park and a lot of the area that is very close to where the Expo 2020 will take place,” says Adel Merheb, the founder of the stocks website Tradeyourmoney.com.
“Maybe they want to leverage that fact, not only selling land to developers but potentially making money by developing it themselves. It could make sense assuming they can execute on that and deliver on that. The bottom line is DI capitalising on the opportunity coming up which is developing a lot of projects in areas where they have land and there will be a greater upside if they develop it rather than allowing someone else to.”
Mr bin Kalban also expected gains to be made on the UAE equity markets, with confidence restored and an embrace of the MSCI upgrading from foreign and domestic investors.
“A correction is being talked about but if a correction happens it will not be more than 10-15 per cent and that will be the brake that fuels further heights and more liquidity will come in,” he said.
“I believe there is more growth coming in 2014. This market will grow and there are elements such as real estate, banks and investment companies performing very well. Also the anticipation of the MSCI upgrade to emerging market status means there will be institutional investors and retail investors eyeing the UAE market making it part of their portfolio.”
On the Dubai Financial Market yesterday, Dubai Investments shares rose 2.81 per cent to close at Dh2.56 apiece.