Emaar Q1 apartment sales drop 81pct, villas 50pct

Emaar Properties, the United Arab Emirates’ biggest developer by market value, said revenue from apartment sales declined 81 per cent in the first quarter and from villa sales 50 per cent amid weak property demand.

Income from apartment sales dropped to Dh375 million ($102m) and from villas to Dh60m, according to Emaar’s earnings statement posted on the Dubai Financial Market today. Overall revenue fell 31 per cent to Dh1.98 billion in the first quarter, while profit slumped 45 per cent. Emaar reported first-quarter earnings on April 24 and provided a breakdown of revenue today.

Emaar will need to "start relying more on international projects" to compensate for a decline in apartment deliveries in Dubai, said Majed Azzam, a Dubai-based analyst at AlembicHC Securities. Prices and margins are lower in international markets and Emaar’s earnings will be "hit this year, until the company resumes sales in Dubai," he said today.

The company, the developer of the world’s tallest tower in Dubai, was hurt by a more than 60 per cent slump in property prices in its home market as speculative demand waned and banks tightened lending since mid-2008. Emaar’s sales in the UAE contributed 79 per cent of revenue in the first quarter compared with 96 per cent a year earlier, according to today’s statement.

Emaar’s shares fell as much as 1.9 per cent to Dh3.16 and were trading 1.2 per cent lower at 11:55am in Dubai today. The stock has dropped 10.4 per cent this year compared with a 2.6 drop in the Dubai Financial Market General Index.

The company’s sales of commercial units and land plots rose 16-fold to Dh704m while revenue from the hospitality business advanced 41 per cent to Dh335.8m, according to the statement. Rental income from leased properties like shopping malls gained 8.5 per cent to Dh507.5m.

Emaar said on April 24 its first-quarter profit of Dh421m was driven by hotels and malls as well as the handover of about 270 apartments in Burj Khalifa, the world’s tallest tower, and Boulevard Plaza. That missed the average estimate of six analysts for a profit of Dh567m.

House prices in the UAE may drop an additional 25 per cent to 30 per cent as population growth stagnates and more properties are put onto the market, according to a report by Dubai-based Rasmala Investment Bank Ltd in March. Emaar said on May 7 it formed a team of senior managers and external consultants to develop a five-year action plan for the company.