Emaar Properties reinvigorated Dubai's battered property sector with a sharp rise in earnings that underscored the emirate's tourism-driven turnaround.
The region's largest developer reported a 76 per cent increase in fourth-quarter profit after retail and hospitality revenues soared.
"We were expecting a good quarter and definitely the numbers are ahead of our expectation," said Yazan Abdeen, a fund manager at ING Investment Management.
Overall revenue increased 20 per cent to Dh2.2 billion (US$598.9 million) in the final quarter of the year, compared with the previous quarter, with net profitrising from Dh406m to Dh716m, beating analyst expectations.
Net profit nearly tripled from Dh274m to Dh716m from the same quarter in 2010.
"I would not look at the business performance against 2010, but it's evolution domestically as a landlord in malls and hotels and also international development," said Mohammad Kamal, an analyst at Arqaam Capital.
"It almost seems counter-intuitive because per capita [mall space] is quite high in Dubai. The key difference is the quality of Emaar's assets."
The retail sector is booming in Dubai, with stores reporting strong sales last year as a flood of tourists visited the emirate. A number of the UAE's major developers such as Majid Al Futtaim and Emaar are reaping the rewards of previous investment in retail, hospitality and leisure - sectors that have been the best-performing in the past year.
Other developers, such as Nakheel and Al Ghurair Group, have also begun to invest in new mall and retail infrastructure to help offset weaker investments in other sectors of the economy.
Overall, Emaar suffered a 27 per cent fall in net profit last year compared with 2010, as revenue dipped by almost a third.
Analysts said this fall reflected the ongoing shift from building properties and selling them to instead building malls, hotels and leisure attractions, which offer a safer, recurring income to the company.
"The mix is different because the majority of revenues in 2010 were driven by sales and now retail and hospitality is taking over," Mr Abdeen said.
Emaar's shopping malls, hospitality and leisure businesses now account for 41 per cent of total annual revenue, compared with a combined contribution of about 24 per cent in 2010.
The shopping malls and retail business increased revenue 13 per cent to Dh2.14bn last year compared with the previous year, as Dubai Mall welcomed a record 54 million visitors. Income from retail and malls accounts for 26 per cent of total revenuefor Emaar, which is expanding Dubai Mall by 1 million square feet from its current size of 12 million sq ft.
Other major developers, such as Nakheel and the Al Ghurair Group, have also begun to invest in new mall and retail infrastructure to help offset weaker investments in other sectors of the economy.
Emaar recorded a Dh92m writedown in the final quarter of last year, which analysts said probably related to its exposure to troubled Dubai Bank and project delays.
"We are happy to see book cleaning with good results - that's definitely something we cannot complain about," Mr Abdeen said.
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