Emaar revenues increase 20%

Dubai: Emaar Properties yesterday revealed that it saw a 20 per cent increase in hospitality revenues in the second quarter of 2011.
Revenues from its hospitality segment grew to Dh283.76 million in the second quarter from Dh236.1 million in the same period in 2010, Emaar said in a financial statement posted on the Dubai bourse’s website.

“Emaar’s main cash cows are their hospitality and retail divisions. The retail sector is doing well here. Dubai Mall has been successful with high occupancy rates. Marina Mall has been less successful, but has still done well. The Address in Downtown has also been a good success story for them,” Matthew Green, head of research and consultancy, UAE at CB Richard Ellis told Gulf News.

According to Nomura International’s calculations, average occupancy rates fell from 87 per cent to 83 per cent from the first to second quarter which is expected considering the key shopping festivals were held in the first quarter of the year.

“We would anticipate a further fall-off in the seasonally low third quarter 2011, but recent mall visits [anecdotally] show large numbers of visitors,” said Chet Riley, analyst at Nomura International.

Regional unrest

Green said the figures have been strong partly due to regional unrest.
“Tourists being deflected from Egypt, Tunisia and to some extent Bahrain has meant that there has been a lot of positives for the UAE hospitality market and has had implications for the retail sector,” said Green.

Emaar also reported an 85 per cent drop in its income from apartment sales during the second quarter, but analysts were not overly surprised by the drop.

“Most of the Dubai-based product is sold or delivered so this figure is not surprising as Emaar is not carrying much inventory,” said Riley.

“It’s not a case of dropping property values. Income holding in terms of apartments and sales is determined by delivery rates. What happened in 2010 is that you had the bulk of Burj Khalifa deliveries spike the revenue last year. This year there hasn’t been the same level of deliveries so there’s been lower recognition,” he added.

Revenues from sale of apartments were Dh265.6 million in the second quarter, compared to Dh1.7 billion in the same period in 2010. In that period, Emaar delivered 244 units (residential and commercial) in the Burj Downtown area and started the handover of villas in Umm Al Quwain Marina, taking total deliveries to 514. Emaar anticipates 686 units and 1.7 million square feet of commercial deliveries in 2011.

Income from sale of commercial units and land rose to Dh596.5 million compared with Dh176.7 million in the prior year. Revenue from the sale of villas also increased to Dh337 million from Dh54.4 million.

“There are some residential and commercial developments in the Downtown area which are due to be delivered over the next 12 months. However, most of the Emaar development is completed and established for example, Emirates Living and the Burj area so they don’t have much liability for them,” said CB Richard Ellis’s Green.

According to Riley, the concern lies in their international portfolio.
“Most of the Dubai operations have been monetised in terms of operations. However, given what is going on politically, operations in Syria, Egypt are affected,” said Riley.