The tills may still be ringing and the droves of tourists still arriving, but Dubai’s retail juggernaut showed signs of slowing slightly yesterday as fourth-quarter profit at the emirate’s largest shopping centre owner missed analysts’ expectations.
Profit for the quarter ended December at Emaar Malls Group, which owns Dubai’s largest shopping centre, The Dubai Mall, stood at Dh435 million, up 5.5 per cent compared with a year earlier.
Although the profit was up, it was still lower than analysts’ forecasts, missing Bloomberg’s consensus of Dh455m.
It prompted suggestions that a market slowdown influenced by oil price falls and the strong US dollar is putting the brakes on the mega mall’s recent massive growth.
Rents from Emaar Malls’ 6 million square feet portfolio of malls in Dubai – The Dubai Mall, Souq Al Bahar, Dubai Marina Mall and Gold & Diamond Park – rose to Dh821 million, up by 3 per cent on the same period a year earlier. Sales, marketing and general expenses for the quarter stood at Dh116m, 6 per cent higher than for the same period the previous year and again missing analysts’ expectations.
The increases came as a total of 124 million visitors flocked through the doors of the malls last year – the equivalent of 50 times the entire population of Dubai and a 9 per cent increase on the previous year.
Emaar Malls said that 80 million people alone visited The Dubai Mall last year, the highest number in the world for any shopping and leisure centre.
Full-year profit came in at Dh1.65 billion, 2.4 per cent lower than analysts’ estimates, but still 23 per cent higher than the previous year. Full-year rents were also up 11 per cent compared with the previous year at Dh2.99bn.
“The retail sector is a key contributor to Dubai’s GDP and Emaar Malls’ assets mark a significant contribution to defining our city as must-visit destination for retail and leisure,” said Mohamed Alabbar, the chairman of Emaar Malls and Emaar Properties.
Emaar Malls’ share price fell by 3.4 per cent during trading yesterday to close at Dh2.49.
Figures from the Dubai Economy Tracker show that Dubai’s economy grew at its slowest pace for more than five years in December as low oil prices and the strong US dollar took their toll.
The number of high-spending Russian visitors splashing their cash at The Dubai Mall has also fallen dramatically. According to Dubai Tourism, the number of tourists coming to Dubai from Russia, CIS and the eastern European region dropped by 22.5 per cent last year compared with 2014.
“Profits are slightly lower than we expected and costs are slightly higher than consensus, which is something we are putting down to the effect of low oil prices and the strong dollar,” said Saleem Khokhar, the head of fund management at National Bank of Abu Dhabi. “However, in general these are still very good results and do not give us any concerns for the long term.”
Last year, the real estate group JLL predicted that about 403,000 sq metres of new mall space will be completed this year, which will prompt retail rents in the city to start to fall.
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