Emaar Properties profits beat forecast

Emaar Properties, the developer behind Burj Khalifa, posted a 14 per cent jump in second quarter net profit, beating analysts' forecasts, as the property developer benefited from higher profit margins on real estate.

Net profit attributable to equity owners in the three months ending in June reached Dh1.45 billion compared with a Dh1.27bn in a year-earlier period. For the first half, net profit surged 15 per cent to Dh2.83bn from Dh2.47bn in the year-earlier period.

Second-quarter revenue increased 1.8 per cent to Dh3.79bn from Dh3.72bn a year earlier.

The company also quadrupled its “other income” to Dh205.1m during the second quarter from Dh51.9m in the year-earlier period.

The results beat estimates from Bahrain-based investment bank Sico, which had projected second quarter net profit of Dh1.3 bn.

“Two factors here drove year-on-year earnings: first higher profit margins of the core real estate segment [which includes villa/apartment construction as well as land sales] and second [higher] non-core other Income,” said Ayub Ansari, a senior analyst at Sico.

The real estate business accounted for 62 per cent of total revenue in the second quarter, with the remainder coming from leasing and other activities, and hospitality.

Emaar’s total backlog now stands at Dh49.5bn, with over Dh40bn in concentrated in Dubai.

Its property sales in the first half soared 22 per cent to Dh10.81bn from Dh8.9bn in a year-earlier period.

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Emaar Properties plans IPO for UAE real estate development business

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The sales increase was generated from residential launches that included Downtown Views II and Vida Dubai Mall in Downtown Dubai, Vida Residences in Dubai Marina, Creek Gate, Harbour Gate and Creek Rise in Dubai Creek Harbour, Park Heights I & II and Maple 3 in Dubai Hills Estate and Golf Views apartments and Urbana III stacked townhouses in Emaar South.

Emaar’s international revenue, which contributed 22 per cent to total revenue, rose 64 per cent in the first half to Dh1.69bn from Dh1.03bn in a year-earlier period, thanks to projects in Egypt, Turkey, India and Saudi Arabia, among others.

The company reiterated its intention to list up to 30 per cent of its real estate business on the Dubai Financial Market, but did not give a time frame for the initial public offering.

The flotation is the third for a business unit of Emaar, Dubai’s biggest listed developer. In 2014, the company floated its Emaar Malls business on the DFM and in 2015 its Egyptian unit debuted on the Cairo stock market.

Emaar Malls, the operator of Dubai Mall, posted higher-than-expected net profit for the second quarter, even as rental revenues fell on a quarterly basis.

The malls operator, whose portfolio includes the Gold & Diamond Park, said earlier this month net profit for the quarter rose to Dh482m, a year-on-year increase of 5 per cent, thanks to a fall in operating expenses and sales and marketing costs.

Profits came in slightly ahead of an average analysts' forecast of Dh467m.

Ain Issa camp:

Established in 2016
Houses 13,309 people, 2,092 families, 62 per cent children
Of the adult population, 49 per cent men, 51 per cent women (not including foreigners annexe)
Most from Deir Ezzor and Raqqa
950 foreigners linked to ISIS and their families
NGO Blumont runs camp management for the UN
One of the nine official (UN recognised) camps in the region

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.”

It Was Just an Accident

Director: Jafar Panahi

Stars: Vahid Mobasseri, Mariam Afshari, Ebrahim Azizi, Hadis Pakbaten, Majid Panahi, Mohamad Ali Elyasmehr

Rating: 4/5

COMPANY PROFILE

Name: Kumulus Water

Started: 2021

Founders: Iheb Triki and Mohamed Ali Abid

Based: Tunisia

Sector: Water technology

Number of staff: 22

Investment raised: $4 million

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