(Updates with unit deliveries in fifth paragraph.)
Oct. 27 (Bloomberg) -- Emaar Properties PJSC, the Dubai- based developer of the world’s tallest building, said third- quarter profit dropped 34 percent as revenue declined and property delivery slowed.
Net income fell to 406 million dirhams ($110 million), or 7 fils a share, from 612 million dirhams, or 10 fils, a year earlier, Emaar said in a statement today. That beat the median estimate of three analysts in a Bloomberg survey for net income of 342.7 million dirhams. Revenue dropped 33 percent to 1.86 billion dirhams, the company said.
Emaar, the United Arab Emirates’ biggest developer by market value, has been hurt by a more than 60 percent slump in property prices in its home market after speculative demand waned and banks tightened lending starting in mid-2008. The company is expanding abroad and focusing on assets that generate recurring income such as hotels and shopping centers.
“Revenue and net profit dropped on the back of expected lower unit delivery as the company delivered the bulk of units in the Burj Khalifa project last year,” said Ahmed Badr, analyst at Credit Suisse in Dubai. “Delivery of international units is yet to strongly filter through, with Saudi and Egypt to hit in the fourth quarter.”
Emaar rose 4.8 percent in Dubai trading to close at 2.6 dirhams today. The shares dropped 28 percent this year, giving the company a market value of 15.8 billion dirhams. The Dubai Financial Market General Index has fallen 15 percent this year.
The developer handed over 712 residential and commercial properties to owners in Dubai during the first nine months, including 201 in the third quarter, it said without giving year- earlier comparisons. Builders in the U.A.E. are generally paid for properties in installments, with a final payment due when the keys are handed over to the buyer.
The Emaar Middle East unit will hand over its first homes in Saudi Arabia over the next few months, the company said. It is also progressing with the handover of homes in Egypt were the first phase is almost complete on two of its projects.
“Emaar’s focus on emerging markets and further driving its profitable subsidiaries is strategic and in line with our commitment to offer long-term value,” Chairman Mohamed Alabbar said in the statement.
Emaar on Oct. 23 started a new unit, Dawahi Development, to develop low-cost housing projects across the Middle East and North Africa region. Emaar MGF Land Ltd., the company’s Indian unit, had a loss of 2.1 billion rupees in the 12 months through March, compared with a year-earlier profit of 738.1 million rupees.
Recurring income from hospitality properties and shopping malls accounted for 41 percent of revenue in the first nine months of the year, the company said. The company’s hotels had an average occupancy rate of 80 percent during the first nine months of the year, Emaar said.
“Revenue from hotels and malls is still pretty strong at 41 percent and is the main value driver for Emaar,” said Badr. “The market is yet to fully price in the value of Emaar’s recurring income with a free option on Emaar’s international development business.”
The developer plans to borrow $700 million and build a commercial center in its Eighth Gate development in Damascus, Alabbar told Dubai TV on Oct. 24. The Syrian government has been clashing violently since March with demonstrators demanding political reform.
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