Emirates’ biggest developer's revenue from apartment sales drop by 81%

Dubai's property bubble was one of the fastest one to rise, and also one of the fastest one on the decline. Prices are already down more than 60% and the estimate provided by the research form of a further 25-30% seems to me to be too optimistic: expect probably another 50% drop until the real bottom is hit.

(Bloomberg — March 15) — Emaar Properties PJSC (EMAAR), the United Arab Emirates’ biggest developer by market value, said revenue from apartment sales declined 81 percent in the first quarter and from villa sales 50 percent amid weak property demand.

Income from apartment sales dropped to 375 million dirhams ($102 million) and from villas to 60 million dirhams, according to Emaar’s earnings statement posted on the Dubai Financial Market today. Overall revenue fell 31 percent to 1.98 billion dirhams in the first quarter, while profit slumped 45 percent. Emaar reported first-quarter earnings on April 24 and provided a breakdown of revenue today.

Emaar will need to "start relying more on international projects" to compensate for a decline in apartment deliveries in Dubai, said Majed Azzam, a Dubai-based analyst at AlembicHC Securities. Prices and margins are lower in international markets and Emaar’s earnings will be "hit this year, until the company resumes sales in Dubai," he said today.

The company, the developer of the world’s tallest tower in Dubai, was hurt by a more than 60 percent slump in property prices in its home market as speculative demand waned and banks tightened lending since mid-2008. Emaar’s sales in the U.A.E. contributed 79 percent of revenue in the first quarter compared with 96 percent a year earlier, according to today’s statement.
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House prices in the U.A.E. may drop an additional 25 percent to 30 percent as population growth stagnates and more properties are put onto the market, according to a report by Dubai-based Rasmala Investment Bank Ltd. in March. Emaar said on May 7 it formed a team of senior managers and external consultants to develop a five-year action plan for the company.

H/T to SS for the link