Emaar Malls rings up 43% rise in second-quarter earnings as visitor numbers increase

Emaar Malls, operator of The Dubai Mall, posted a 43 per cent surge in second-quarter net profit, thanks to an increase in visitor numbers to its shopping centres.

Net earnings rose to Dh412 million from Dh288m in the same period last year, while revenue increased 11 per cent to Dh727m from Dh653m a year earlier.

Mohamed Alabbar, the chairman of Emaar Malls, attributed that to the “robust footfall and tenant sales at The Dubai Mall, our flagship asset”.

The malls operator said visitor numbers in the first half of the year rose 11 per cent to 62 million from the year-earlier period.

The combined sales of its tenants stood at Dh9.6 billion, similar to the same period last year.

Emaar Malls’ base rent renewal rates in the first half rose 30 per cent, while overall gross leasable area (GLA) occupancy increased to 96 per cent.

Emaar Malls, which has a total GLA of 6 million square feet, plans to complete its expansion of The Dubai Mall next year with the addition of 1 million sq ft of space.

The new leasable areas will make up about 15 per cent of the mall.

In the first half, Emaar Malls began opening its new brand of community malls called The Souk at Arabian Ranches II. It plans to open new malls in areas of Dubai including The Meadows and The Springs.

The emirate’s retail market is expected to stabilise this year as the number of Russian visitors falls because of Russia’s economic woes and the rouble’s decline.

In addition, European tourists may stay away from Dubai’s malls because of the euro’s weakness, according to the property broker JLL. The realtor expects small and mid-sized tenants to struggle to meet their financial targets amid high rents this year.

Emaar Malls shares rose 0.3 per cent to Dh3.32 in Dubai.

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Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.

Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.

“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.

Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.

“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.

Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.

From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.

Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.

BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.

Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.

Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.

“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.

Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.

“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.

“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”

The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”