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Emaar Properties said it has returned to profitability, reporting a AED 655 million net profit for the third quarter ending September 2009 from the sale of high-margin properties as well as earlier delivery of villas, up from a AED 1.25 billion loss in the second quarter of this year.

"The increase in profitability is due to the higher margin relating to Alma townhomes in Arabian Ranches handed over during the third quarter. The townhomes were handed over ahead of their scheduled delivery, demonstrating Emaar's commitment to project deliveries," a statement said.

Emaar also said its profits for the first nine months declined 64 percent to AED 1.4 billion, down from AED 3.68 billion in the first nine months of 2008. However, it said a AED 393 million loss for the first nine months compared to a AED 2.59 billion profit recorded in the corresponding period last year, due to a AED 1.79 billion writedown owing to impairment of assets, its balance sheet shows.

Emaar's revenues also fell 41 percent to AED 5.42 billion for the first nine months of this year, down from AED 9.18 billion in the same period last year.

24 October 2009


Analysis and Forecast: decreasing risk


The results from Emaar are a welcome, rare positive piece of news coming from the Dubai real-estate sector, the backbone of the Dubai economic boom. Emaar is the region’s biggest private developer and owns such project as Burj Dubai, the world’s tallest building.

However, it must be noted that this news relates to projects that are already under construction that have been completed on or before schedule, rather than new projects. With the dramatic slowdown in the construction sector, finding additional resources for timely project delivery has become much easier and as payment terms are often connected to construction progress, Emaar has taken the step of completing ongoing projects to ensure payments for those is made.

There are still no long-term plans for Emaar or indeed any other major developer to launch new projects and therefore the long-term survibability of those developers remain doubtful.

There has been no news about a reported merger between Emaar and government-owned developers including Dubai Properties (above), which was supposed to have been completed by October 2009. This demonstrates that there is still significant uncertainty in how the government and the large developers will address the new, post-boom reality.

The figure below shows the Emaar share price during the past two weeks. The results were announced on 22 October.