Property developers and builders are likely to report third-quarter financial statements that reflect the deep challenges facing the sector, analysts say.
But those companies that have managed to diversify their business and include large amounts of recurring revenue will post stronger numbers. A consensus of analysts forecasts for Emaar Properties, Arabtec, Aldar Properties and Drake & Scull by Reuters shows combined profits of Dh604.1 million (US$164.47m), with Emaar the only company to show an increase on the same period last year.
For the development companies, the significant change over the past year is the amount of finished property being delivered. Aldar has begun handing over the Al Bandar project at Raha Beach, while Sorouh Real Estate is finishing Sun and Sky Towers on Reem Island and Emaar is passing keys over to buyers in Downtown Burj Khalifa. Chet Riley, an analyst at Nomura Securities, wrote in a report on the property sector that the number of hand overs of finished property and the fate of defaulted units would play an important role in the year ahead. "Operational delivery is a key revenue driver," he said. "Real estate companies are coming to the business end of the development cycle and delivering units to the market. Defaults that get 'put back' into inventory for later resale or leasing still need to be financed and this remains the imminent, looming challenge."
The biggest concern in the market right now is how Aldar will handle its upcoming obligations, Mr Riley said. The developer is expected to report a net loss of about Dh230.9m for the quarter, according to the average of four analysts surveyed by Reuters. Aldar reported a net profit of Dh427.2m for the third quarter last year. Contractors are also facing issues related to the challenging property environment, with increasing provisions for stalled work.
However, the market leaders -Arabtec and Drake & Scull - are making headway in diversifying their exposure to other countries in the region. Arabtec's shares were pushed up this week on news that its long-stalled contract to build the 403-metre-tall Okhta Centre project in St Petersburg is moving ahead, despite community protests. Drake & Scull has started acquiring companies in the region, including two in Saudi Arabia.
bhope@thenational.ae
Skewed figures
In the village of Mevagissey in southwest England the housing stock has doubled in the last century while the number of residents is half the historic high. The village's Neighbourhood Development Plan states that 26% of homes are holiday retreats. Prices are high, averaging around £300,000, £50,000 more than the Cornish average of £250,000. The local average wage is £15,458.
At a glance
Global events: Much of the UK’s economic woes were blamed on “increased global uncertainty”, which can be interpreted as the economic impact of the Ukraine war and the uncertainty over Donald Trump’s tariffs.
Growth forecasts: Cut for 2025 from 2 per cent to 1 per cent. The OBR watchdog also estimated inflation will average 3.2 per cent this year
Welfare: Universal credit health element cut by 50 per cent and frozen for new claimants, building on cuts to the disability and incapacity bill set out earlier this month
Spending cuts: Overall day-to day-spending across government cut by £6.1bn in 2029-30
Tax evasion: Steps to crack down on tax evasion to raise “£6.5bn per year” for the public purse
Defence: New high-tech weaponry, upgrading HM Naval Base in Portsmouth
Housing: Housebuilding to reach its highest in 40 years, with planning reforms helping generate an extra £3.4bn for public finances
Company%20Profile
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Test
Director: S Sashikanth
Cast: Nayanthara, Siddharth, Meera Jasmine, R Madhavan
Star rating: 2/5
Company profile
Name: Infinite8
Based: Dubai
Launch year: 2017
Number of employees: 90
Sector: Online gaming industry
Funding: $1.2m from a UAE angel investor
The National in Davos
We are bringing you the inside story from the World Economic Forum's Annual Meeting in Davos, a gathering of hundreds of world leaders, top executives and billionaires.
The National's picks
4.35pm: Tilal Al Khalediah
5.10pm: Continous
5.45pm: Raging Torrent
6.20pm: West Acre
7pm: Flood Zone
7.40pm: Straight No Chaser
8.15pm: Romantic Warrior
8.50pm: Calandogan
9.30pm: Forever Young
Where to buy
Limited-edition art prints of The Sofa Series: Sultani can be acquired from Reem El Mutwalli at www.reemelmutwalli.com
The specs
AT4 Ultimate, as tested
Engine: 6.2-litre V8
Power: 420hp
Torque: 623Nm
Transmission: 10-speed automatic
Price: From Dh330,800 (Elevation: Dh236,400; AT4: Dh286,800; Denali: Dh345,800)
On sale: Now
Australia tour of Pakistan
March 4-8: First Test, Rawalpindi
March 12-16: Second Test, Karachi
March 21-25: Third Test, Lahore
March 29: First ODI, Rawalpindi
March 31: Second ODI, Rawalpindi
April 2: Third ODI, Rawalpindi
April 5: T20I, Rawalpindi