Qatar's Ezdan sees Q4 profit similar to Q3's

Qatar's Ezdan Real Estate Co expects its net profit in the fourth quarter to be similar to that of the third and is aiming to sell part of its property portfolio by year-end to a Malaysian-based real estate investment trust (Reit) to finance new projects, its managing director said on Sunday.

Qatar's largest property developer by market value expects strong demand for affordable housing in its home market, where a shortage of middle-income housing supply has left a vacuum for real estate firms to fill.

"Over the past three years Qatar's population increased to 1.5 million. If we continue at the same rate, along with economic growth ... all this needs property," Hesham El Sahtary told Reuters in an interview.

Sahtary said the fourth quarter net profit result would be "similar" to the 94 million Qatar riyals ($25.82 million) made in the third quarter.

Qatar property prices dropped by about 30 per cent in the first half of the year. But the economy could grow 7 per cent in the 2009/10 fiscal year and 16 per cent the following year, the emir said on November 3.

"Our rents have declined 10-15 per cent since the crisis began late 2008 but we are still maintaining our profit and despite the market situation there is an increase compared to last year," he said.

Qatar, the world's largest liquefied natural gas exporter, has been pouring billions of dollars into infrastructure development to diversify the economy away from hydrocarbons, help propel itself onto the international arena and become a transport hub between Europe and Asia.

Ezdan, with about $1 billion worth of projects under construction, is also working on selling some of its portfolio, worth about 600-700 million riyals to a Reit based in Malaysia to help finance future projects.

"They will buy the property from us and we will manage it for them with a fixed return," said Sahtary. "The plan is to launch it in Malaysia as an international fund and we hope to conclude it this year," he said, adding Islamic lender Masraf Al Rayan was working on the deal.

Ezdan, whose shareholders agreed on November 4 to merge with Group of International Housing Company (GIHC), will launch new projects one the merger is complete, Sahtary said.

Sahtary said Ezdan, which has a market capitalisation of $8.6bn, will have around 6,000 employees once the merger is concluded, giving it a stronger base to compete with local rivals such as Barwa Real Estate and the country's sovereign wealth fund's property arm Qatari Diar.

"This is a strong merger that benefits investment, the economy, investors, and our tenants," he said. "It will make us stronger and enable us to finish projects faster." Sahtary said.

Ezdan, which has an expansion plan stretching to 2039 with the first phase concluding in 2019, plans to grow in its home market first, then regionally and finally internationally.

The merger will help the company compete on an international level, Sahtary said.

"We have projects worth more than $1bn under construction ... We have projects in the pipeline and a plan for 30 years, including residential and hotel projects that will be announced after the merger."

Among its planned projects are four towers at a cost of about 2.5bn riyals with Qatar General Insurance and Reinsurance Co and also plans to tap debt markets soon, Sathary said without elaborating.

Ezdan's shares closed down 3.4 per cent on Sunday.