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Credit Suisse Forecasts Sharp Fall 
in Q4 Profits for Dubai Realty Sector

DUBAI - Credit Suisse expects mixed fourth quarter results for major UAE real estate companies with earnings of Dubai-based developers likely reflecting the impact of the the global liquidity crunch that has slowed down the sector.

In its fourth quarter preview on UAE real estate, Credit Suisse said it is projecting higher earnings for Abu Dhabi-based Aldar Properties and Sorouh Real Estate but expects the opposite for Dubai’s Union Properties and Emaar Properties.

“We expect fourth quarter earnings for both Aldar and Sorouh to increase by 62 per cent and 13 per cent respectively compared to the third quarter. However, we expect earnings for Union Properties to decrease by 50 per cent and Emaar 43 per cent.” Credit Suisse said net profit for the fourth quarter of Emaar Properties, the region’s biggest property company, is expected to drop from the previous quarter to Dh855 million on slower revenue growth. Emaar posted a net profit of Dh1.51 billion in the third quarter of 2008.

Emaar’s full year profits should reach Dh5.7 billion, 13.3 per cent lower from 2007 earnings of Dh6.575 billion as the company took a Dh750-million goodwill writedown in the third quarter related to its US home-building unit, John Laing Home.

Emaar’s revenue growth for the full year is up 4 per cent compared to 2007’s revenue surge of 25.4 per cent, said Credit Suisse.

Union Properties on the other hand, is expected to post net profits of Dh121 million in the fourth quarter, a 50 per cent drop from third quarter earnings as a result of lower gain on revaluation of investment properties.

Union’s full year net profit however, is expected to go up 35 per cent from a year earlier to Dh922 million.

Dubai property developers are feeling the pinch of a global economic slump, with property prices dropping 23 per cent last December as thousands of expatriates lost jobs, leaving an oversupply of housing units.

Abu Dhabi developers will fare better than their Dubai counterparts with visible undersupply sustaining property prices and demand.

Abu Dhabi’s top property company, Aldar Properties’ net profit for the period is expected at Dh1.2 billion, 62 per cent higher from the third quarter, with full year earnings expected at Dh4.6 billion.

Credit Suisse said, however, that about 40 per cent of Aldar’s full year earnings is coming from a gain of revaluation of investment priorities, “which we expect to decrease in first quarter of 2009.”

Credit Suisse expects second-ranked Sorouh’s fourth quarter net income to surge 13 per cent from the previous quarter and 113 per cent from a year ago to Dh2.7 billion, driven by strong land sales in Shams Abu Dhabi. Abu Dhabi’s second largest property company is expected to rake in full-year earnings of Dh4.59 billion.

· rocel@khaleejtimes.com