Gulf News - Emaar Properties’ profit numbers mirror Dubai market’s growth curve

The first-half of 2022 has closed on a strong note for Dubai property as it recorded 43,200 transactions worth Dh115 billion. This marks a year-on-year growth of nearly 60 per cent in terms of sales volume and 87.8 per cent on value. June broke a 13-year record, with over 41 per cent growth vis-à-vis volume in comparison.

Ending the first-half on a record-breaking note, Dubai property is well-positioned to produce an even better second half with Expo City set to open its doors in October. New developments, rising oil prices, the Al Etihad Rail expansion, and visa policies with relaxed conditions coming into effect from September 2022 will play their part to attract more investors into the property market.

Emaar Properties is surely going to benefit from this boom. Having a market cap of Dh43.5 billion, Emaar during the first quarter saw revenue increase 12 per cent to Dh6.6 billion. Group-wide sales increased 17 per cent to Dh8.3 billion as the local property market continued the rebound.

Emaar reported a 34 per cent increase in first-quarter earnings to Dh1.05 billion, while property sales increased 16 per cent to Dh6.8 billion. The malls and the retail business recorded improved profits during the first quarter. The developer’s stock is up 30 per cent from the start of the year to the May peak. However, the macro-economic environment resulted in a year-to-date return of 7%. With the property market staying strong, the stock could achieve the May peaks in the second-half.

Onto a higher profit path

After a strong 2021, Emaar’s profitability is likely to rise next year, despite higher building material prices and general cost inflation, helped by advantageous construction outsourcing terms that are fixed and don’t allow for pass-through of higher costs. Additionally, the retail sector has emerged from the contraction in 2020, with tenant sales exceeding 2019 levels and a particularly strong demand for luxury. This supported growth in rental rates is broadly in line with pre-Covid levels.

Dubai’s reputation as a haven for investors continues to support the market recovery, with real estate values climbing at their fastest rate. Emaar Properties is defending its current market share by establishing the foundation for growth with solid momentum. The company’s 2.5 per cent 12-month trailing dividend yield is impressive and goes a long way in maintaining dividend sustainability.