UAE's Emaar Q3 outlook positive

08/10/2010 00:00 AST

Dubai's Emaar Properties remains a lone bright spot in a gloomy outlook for United Arab Emirates (UAE) developers, but woes are set to continue for Abu Dhabi's Aldar Properties with an expected third-quarter (Q3) loss.

Real estate firms across the Gulf state have been hit hard by the global financial crisis and the pain is set to continue for most listed firms in Dubai and Abu Dhabi, likely reflected in quarterly earnings to be released later in October. A recovery in Dubai's property sector is still some three to five years away, despite a confidence boost from the restructuring of conglomerate Dubai World and Dubai's recent return to international debt markets, Marwan Shehadeh, Group Director of corporate development at UAE conglomerate Al-Futtaim Group, told Reuters earlier this week.

Most analysts polled by Reuters expect Emaar to increase earnings in the Q3, boosted by the handover of properties at Burj Khalifa, the world's tallest tower.

"Forecasting risk is almost entirely dependent on the handover rate of the Burj Khalifa, which we estimate is 30 percent in Q3 2010," said Chet Riley, Analyst at Nomura.

Nomura forecasts a net profit of 737 million UAE dirhams (200.6 million US dollars) for Dubai's largest listed developer, while Egyptian bank EFG-Hermes expects a profit of 750 million, up 14.6 percent from the same period last year.

For Dubai's second-largest developer Union Properties, Nomura expects a profit and EFG is forecasting a loss, as the market awaits the sale of the company's Ritz Carlton hotel in the Dubai International Financial Centre (DIFC). Profits at Dubai construction firms Arabtec, the United Arab Emirates' largest builder by market capitalization, and Drake & Scull International, are expected to fall from the same period a year ago.

The key reason for the lower expected earnings is a delay in the execution of projects and also a slowdown witnessed during Ramadan, analysts said. Bahrain's Securities & Investment Company expects Arabtec's Q3 profit to fall 65.8 percent from the same period last year to 57 million dirhams.

Reuters