Dubai’s Emaar Properties reported a 55% rise in first-quarter net profit on Tuesday, as the region’s economic recovery brought consumers back to its malls and shopping units, and house buyers returned to the market.
The builder of the world’s tallest tower, the Burj Khalifa, reported a profit of AED 863m ($234.96m) in the three months to 31 March, compared to AED 556m in the prior-year period. Analysts polled by Reuters had forecast profit of AED 873m.
Revenue was AED 2.26bn, up from 2.11 AED bn a year earlier, of which 38%, or AED 863m, came from Emaar’s malls and shopping unit and 16%, or AED 483m, from its hospitality and leisure unit.
Emaar diversified out of property when Dubai’s housing market prices slumped by more than half from a 2008 peak when the emirate’s building boom turned bust.
Over the last 18 months, Emaar has led a sector recovery, largely owing to speculative buyers returning to the home sales market.
The developer has claimed huge successes at pre-sales of its recently launched projects, as investors queued overnight to buy apartments and villas on a first-come-first-serve basis.
Emaar said it made property sales of AED 5.92bn in the first quarter, nearly double that of 2013’s first quarter.
Emaar’s shares ended 1.4% higher on Dubai’s main bourse before the company announced its results, taking their 2014 gains to 41%. They have nearly tripled in value since the start of 2013.
The company plans to spin off and sell 25% of Emaar Malls Group through a public offering likely to take place in London and Dubai later this year.
Investors expect Emaar’s recovery to continue. According to a report by consultants Jones Lang LaSalle, another 40,000 new homes will enter Dubai’s property market over the next two years as developers revive projects stalled after the collapse of the emirate’s real estate market
Emaar has been criticised for using hard handed techniques and forcing landlords to pay service charges, Most of the service charges are not being used for the developments instead go into sinking funds and paying for emaars own service company Emrill. Landlords do not get any real value for what they pay in. Emaar closed access to gyms, and visitors parking, even holding title deeds to ransom.
Emaar's technique has not left a good impression of them in the local market however international clients will not be aware of these aggressive tactics to squeeze income from landlords.