Emaar Properties agreed to pay a 10 per cent dividend to shareholders yesterday as investors gathered in Dubai for the developer's annual general meeting.
The mood among the 200 or so investors gathered in the lavish Diamond Ballroom at The Address Hotel at Emaar's Dubai Mall was businesslike as they voted to accept the payout of 10 fils per share.
The dividend was the same as it has paid over the past two years, even though the developer behind Burj Khalifa, the world's tallest building, posted 2012 profits of Dh2.1 billion (US$571.8 million) - an increase of 18 per cent compared with the previous year.
"A 10 per cent dividend is a fair amount," the Emaar chairman Mohamed Ali Alabbar told the packed room. "We are working on major projects and we also need to provide for future projects."
Only one speaker from the floor commented on the decision, calling the dividend "both a blessing and a good amount".
Analysts point to the fact that the 10 fils per share sum equates to a dividend yield of about 1.9 per cent, lower than most UAE companies. However, it was an improvement on 2008 and 2009, when the company, suffering from the effects of the financial crisis, paid no dividend.
The profits at the government-backed company came off the back of Dh8.2bn in annual sales - slightly higher than those recorded the previous year. However, within this the company said that revenue from apartment sales more than doubled from Dh1.1bn in 2011 to Dh2.5bn last year. But this increase was offset by a sharp fall in revenue from the sale of office space over the year from Dh2.7bn to Dh682.2m last year.
With reports circulating that the company is investigating ways of spinning off its lucrative malls and hospitality businesses and its Turkish operation in an attempt to boost returns, shareholders asked Emaar's chairman for more information about why the group's hospitality and retail businesses had contributed so much to the bottom line.
"The last three years have been abnormal years," Mr Alabbar told the meeting. "The percentage of profit provided by shopping malls has therefore been a bigger proportion of the profits than would normally have been the case. Now you will see real estate activity will go up again."
Investors also questioned Emaar's 45 per cent stake in the Dubai-based Sharia-compliant mortgage company Amlak Finance.
"For the past four years the situation at Amlak has been very difficult," Mr Alabbar said. "There are ongoing discussions with the Government and the situation today is totally different from that two years ago. The board of directors will not forfeit our rights in Amlak."
This weekend the company plans to stage a sales launch for 188 townhouses in Dubai's as yet undeveloped Reem area, which it says it will sell for Dh988,888 a throw - about half the going rate of second-hand sales for similar properties in the area.
When asked about Emaar's investment in the Bawadi area of Dubai, where it originally planned to build a Las Vegas-style theme park and 1,200 apartments, Mr Alabbar said: "The Bawadi scheme has been through different stages and the situation was very difficult. But our new Reem scheme, which we launched this week, is adjacent to Bawadi and there has been an increase in land prices on the scheme."
