Dubai’s Emaar Properties remains a lone bright spot in a gloomy outlook for UAE developers, but woes are set to continue for Abu Dhabi’s Aldar Properties with an expected third-quarter loss.
Real estate firms across the Gulf state have been hit hard by the global financial crisis and the pain is set to continue for most listed firms in Dubai and Abu Dhabi, likely reflected in quarterly earnings to be released later in October.
A recovery in Dubai’s property sector is still some three to five years away, despite a confidence boost from the restructuring of conglomerate Dubai World and Dubai’s recent return to international debt markets, Marwan Shehadeh, group director of corporate development at UAE conglomerate Al Futtaim Group, said.
Most analysts expect Emaar to increase earnings in the third quarter, boosted by the handover of properties at Burj Khalifa, the world’s tallest tower.
‘Forecasting risk is almost entirely dependent on the handover rate of the Burj Khalifa, which we estimate is 30 per cent in the third quarter,’ said Nomura analyst Chet Riley.
Nomura forecasts a net profit of 737 million UAE dirhams ($200.6m) for Dubai’s largest listed developer, while Egyptian bank EFG-Hermes expects a profit of 750m, up 14.6pc from the same period last year.
For Dubai’s second-largest developer Union Properties, Nomura expects a profit and EFG is forecasting a loss, as the market awaits the sale of the company’s Ritz-Carlton hotel in the Dubai International Financial Centre (DIFC).
Profits at Dubai construction firms Arabtec, the UAE’s largest builder by market capitalisation, and Drake & Scull International, are expected to fall from the same period a year ago.
Bahrain’s Securities & Investment Company expects Arabtec’s third-quarter profit to fall 65.8pc from the same period last year to 57m dirhams.
Aldar Properties, Abu Dhabi’s largest developer by market capitalisation, is likely to suffer its fourth consecutive quarterly loss on declining land sales, while the market awaits a financing plan for the indebted firm.
Riley expects Aldar to incur a loss of 306m dirhams.
EFG expects little change for Sorouh Real Estate, Abu Dhbai’s second-largest developer.
‘Sorouh won’t see much change from the second quarter. We don’t think they will recognise revenue from their Sun and Sky projects this quarter,’ said Jad Abbas, equity research analyst at the bank.