Dubai's Emaar Properties PSJC (EMAAR.AI), the Middle East's largest home builder, Thursday said it returned to profit in the third quarter and flagged signs of recovery in the emirate, in results that beat most analyst expectations.
Profit for the period was 655 million U.A.E. dirhams ($178.3 million), or 11 fils a share, compared with a restated net loss of AED417 million, or 7 fils a share, a year earlier, largely due to higher margins on property delivered during the period, the developer said in a statement on the Dubai Financial Market Web site.
Cairo-based investment bank EFG-Hermes had expected Emaar to post a third-quarter profit of AED181.2 million, while Dubai's Shuaa Capital forecast AED425.6 million.
Revenue rose 12% to AED1.95 billion, from AED1.75 billion in the third quarter of 2008.
"These results are better than our expectations and our full year estimates now look shy, especially if the same strong top line performance carries on into the final quarter," said Sana Kapadia, real estate analyst at EFG-Hermes.
In April, the developer, which is building the world's tallest tower in Dubai, changed its accounting methods to the complete contract method, which means the developer can only book profit when completed units are handed over.
Emaar's third-quarter 2008 net profit was AED1.51 billion before it introduced the new method. It posted a AED1.29 billion loss during the second quarter of 2009 after it wrote down the complete book value, or AED1.72 billion, of its U.S. housing unit JL Homes.
Emaar, like other U.A.E. developers, has been hit by a regional property downturn brought on by the wider global financial crisis. In Dubai, home prices have slumped up to 50% from peaks, lending has slowed and by some estimates close to $300 billion worth of construction is either delayed or canceled.
However, Emaar Chairman Mohamed Alabbar, who also helps oversee a committee evaluating the impact of the global credit crisis on Dubai, said there were "clear signals of real estate prices gaining momentum in premium areas."
"The city remains on track for sustained growth, despite the impact of the global financial crisis, which will further boost the property sector," he said.
Emaar said its merger with three of Dubai Holding's property units is progressing, but didn't give any further details about the consolidation plans.
The developer said it will enter a "new phase" of growth during the fourth quarter, focusing on project delivery and diversification as it moves closer to opening the Burj Dubai, the world's tallest building, in December.
"With the opening of global icons like Burj Dubai, Emaar will once again put the world's spotlight on the city, highlighting its can-do spirit and strength to dream," Alabbar said.
Emaar shares closed trading Thursday 0.2% higher at AED4.61 in a broadly negative market.
-By Stefania Bianchi, Dow Jones Newswires; +971 4 3644967; stefania.bianchi@dowjones.com
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