Dubai’s Emaar Properties Says Profits To Quadruple By 2018

Emaar Properties, Dubai’s largest listed real estate developer, predicted on Wednesday that its profits would more than quadruple by 2018 as the emirate’s economy booms and the company’s overseas business expands.

The company, about 29 per cent owned by the Dubai government, is seen by many investors as a proxy for the emirate’s economy, which relies heavily on real estate development, tourism and the retail industry – sectors in which Emaar is a major player.

The company’s optimism underlines Dubai’s strong recovery from its 2008-2010 real estate market crash. Average residential property prices jumped 33 per cent from a year earlier in the first quarter of 2014, according to consultants JLL.

Emaar chairman Mohamed Alabbar told the company’s annual general meeting, a lavish evening event held outdoors by the Burj Khalifa, the world’s tallest skyscraper which was built by Emaar, that he expected net profit to hit Dhs3.07 billion ($837 million) this year.

That would mark an increase of 19 per cent from last year’s Dhs2.57 billion. Alabbar predicted a continued rise in subsequent years, hitting Dhs5.82 billion in 2016 and Dhs10.93 billion in 2018.

“These are realistic expectations and even a bit conservative,” he said, adding that the company only booked profits upon completing projects.

Much of Emaar’s growth is expected to come from projects worth billions of dollars within Dubai; over the last 18 months, the company has announced plans for huge residential and commercial developments in the emirate.

Last month the company said it would sell up to 25 per cent of its shopping mall unit in coming months through a public offer expected to raise between Dhs8 and Dhs9 billion, one of the region’s largest equity offers since 2008. Shares in the unit may be listed in London and Dubai.

Emaar is also involved in projects across much of the Middle East, including Saudi Arabia, Egypt and Turkey, and countries as far afield as Pakistan and Indonesia.

“We don’t guarantee the economic and political situations in the countries we operate. In Egypt for example the company halted operations for around six months during the revolution” of 2011, Alabbar said.

Shareholders approved a 15 per cent cash dividend and a 10 per cent bonus share issue for 2013; it was the company’s highest dividend since 2007, when the cash dividend was 20 per cent. The cash dividend for 2012 was 10 per cent of share capital.

Emaar shares are up 43 per cent so far this year to Dhs10.95, but many analysts see room for further gains; brokerage Naeem late last month raised its target price to Dhs13.15.