Realty sector faces Q4 profit fall

Published Tuesday, January 01, 2008

By Shweta Jain

(OSAMA ABUGHANIM)

Corporate earnings in the UAE are forecast to post a marginal rise in the fourth quarter of 2007, except for the real estate sector, which will record a negative growth in profit, according to equity analysts.

The average net profit of UAE-listed real estate firms are expected to slide 6.2 per cent in the fourth quarter of 2007 compared with the same period in 2006. The average net earning of the top four realtors are forecast to be Dh689.92 million in Q4 of 2007 against Dh735.76m.

Equity analysts have taken a divergent view on each of the major players.

Market heavyweight Emaar Properties’ average profit in Q4 of 2007 is forecast to decline by 5.3 per cent, to rest at Dh1.62 billion against Dh1.71bn in the corresponding period in 2006. For the whole of 2007, the company is expected to record a profit of Dh6.45 bn, against Dh6.37bn, a marginal increase of Dh88m.

However, Deutsche Bank predicted Emaar’s profit to go up by 5.3 per cent in the quarter. There seems to be a wide disparity is predictions with Sico investment bank predicting a decline by 14.6 per cent in Q4.

Emaar surprised the markets by winning approval for a 10 per cent buy-back of its shares for the second time in two years. The decision by the Securities and Commodities Authority (SCA) came several months after the expiration of Emaar’s last share buy-back period – which was not exercised.

Abu Dhabi’s Aldar Properties, on the other hand, has emerged as a star company with its average profit for Q4 of 2007 predicted to go up by 58.7 per cent, to touch Dh686.75m. The company reported net profit thanks to shareholders of Dh432.72m in the fourth quarter of 2006, while it recorded a Dh506m profit in the third quarter of 2007.

Deutsche Bank has predicted Aldar’s profits to go up as much as

136 per cent.

The second-biggest UAE developer by market value, Aldar issued 16.4 million shares on December 27 from convertible bonds it sold earlier this year, according to the Abu Dhabi bourse, and that Aldar has until January 3 to issue another 13.97 million shares.

Sorouh Real Estate is expected to take a 46.5 per cent hit in its Q4 profits, according to Prime Group. Sorouh reported net profit of Dh496.13 million in the fourth quarter of 2006.

Union Properties is also projected to have its profits decline by 38.3 per cent in the last quarter of 2007.

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