Dubai Property Law Helps Emaar To Record Earnings

by Lorys Charalambous, Tax-News.com, Cyprus

21 July 2006

Emaar Properties, the Dubai-based publicly-traded property developer, has announced record turnover and profits following the enactment of a new law allowing foreigners the right to buy property freeholds in the city.

For the half year that ended on June 30, 2006, Emaar announced revenue of AED5.079 billion (US$1.383 billion) and profits of AED3.053 billion (US$0.831 billion). The revenue and profit for the second quarter of 2006 (April to June) were AED2.840 billion (US$0.773 billion) and AED1.536 billion (US$0.418 billion) respectively.

Emaar’s net profits for the first six months of the year gained by 21% over the record first-half 2005 results of AED2.533 billion (US$0.690 billion). Revenues for the half year grew 8% over half-year 2005 results of AED4.717 billion (US$1.284 billion).

Net profits grew 1% over the first quarter 2006 results of AED1.517 billion (US$0.413 billion), and by 27% over the net profit of AED1.208 billion (US$0.329 billion) in second quarter 2005.

Second quarter 2006 gross profit rose to AED1.681 billion (US$0.458 billion), an increase of 13% from AED1.487 billion (US$0.405 billion) during the first quarter of 2006, and 40% from AED1.199 billion (US$0.326 billion) in the second quarter of 2005.

Annualized Earnings per Share (EPS) for the period is AED1.04 compared to the actual EPS of AED0.85 for 2005.

Emaar says that the enactment of the Dubai Property Law in early 2006 has seen sales for both residential units and land plots strengthen in Dubai, boosting the company's own results.

“Emaar gains its momentum for growth from Dubai, which has made rapid strides in all sectors driven by the vision of UAE Vice President and Prime Minister and Ruler of Dubai His Highness Sheikh Mohammed Bin Rashid Al Maktoum,” said Mohamed Ali Alabbar, Chairman of Emaar Properties.

“As the regional hub for trade and commerce, property development, information technology, media and knowledge resources, Dubai fuels the growth of companies like Emaar," he added.

However, Emaar has also put in place an aggressive international expansion plan. During the first half of 2006, Emaar announced a number of international projects of development value AED79.04 billion (US$21.52 billion).

“Our global expansion programme is on overdrive and aligned with our vision of becoming one of the most valuable companies in the world in the next four years,” noted Alabbar.

In June, the Emaar board of directors approved the company’s acquisition of John Laing Homes, the second largest privately held homebuilder in the US. The AED3.856 billion (US$1.050 billion) acquisition of John Laing Homes was funded from the proceeds of Emaar’s July 2005 rights issue, which doubled the capital of the company to AED6.1 billion (US 1.66 billion).

Also in 2006, Emaar signed a Memorandum of Understanding with His Majesty King Mohamed VI of Morocco to develop three landmark projects of development value AED19.8 billion (US$5.39 billion) and entered into a joint venture partnership with the Syrian General Organization for Housing to build homes for the middle income segment.

Other international projects include an MoU with Pakistan’s Port Qasim Authority for mixed use land development in Karachi, and the opening of the company's first full-scale hotel in India, the Novotel Hyderabad.

At the beginning of July, Emaar also announced plans to open a full-fledged representative office in China, becoming the first Middle East property developer to enter the potentially lucrative Chinese economy.

Emaar is also thinking big on its home turf, and is behind the construction of the world's tallest tower, the US$1 billion Burj Dubai.

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