Dubai: Emaar Properties recorded a net profit of Dh1.2 billion for the first three months, a 17 per cent gain over the Dh1.02 billion it made during the same period last year. Even on a quarter-on-quarter basis, the growth percentage remains the same after a Dh301 million write-off of assets during the fourth quarter of 2015 to Dh1.03 billion.

Most pertinently, the developer saw a robust 70 per cent gain in sales from Dubai during the first quarter of 2016, which Emaar puts at “Dh4.19 billion”.

Overall revenues during the period were Dh3.52 billion, up 17 per cent. The apparent discrepancy comes as “revenue for real estate is recorded based on percentage of completion of the projects subsequent to sale [and collection of at least 20 per cent of property value]”, Emaar sources said.

Strong investor backing

The healthy numbers from Dubai confirms that the developer has had a strong investor backing for its recent off-plan launches, as well any inventory carried over from last year’s releases.

According to market analysts, Emaar releases have hoovered in much of the available liquidity as buyers preferred to go in for a known developer at a time when the market is yet to fully recover. It also suggests that more buyers, domestic and international, are taking up assets in the newly created Dubai Creek Harbour master-development.

The venture, a joint venture with Dubai Holding, has seen multiple high-rise launches from Emaar, including The Tower, which is set to be the tallest man-made structure in the UAE, outstripping the Burj Khalifa by a “notch”.

But, according to David Godchaux, CEO of the realty consultancy Core, “We can’t say that it is sucking up all the available liquidity from the competition in terms of off-plan launches in Dubai. There are other off-plan developers doing relatively well in the market, like Meraas for instance.

Cautious

“Having said that, buyers are still very cautious when it comes to acquiring off-plan properties in the UAE. As usual, in similar situations, the market has witnessed in the past eight months a flight to quality from investors and users.”

Outside of Dubai, Emaar’s sales in Egypt helped post a 44 per cent gain from international operations to Dh499 million. This is 14 per cent of the developer’s overall Q1-16 top-line numbers.

The other big income generator was the malls and hotels unit, with recurring revenues totalling Dh1.55 billion. This is a substantial 44 per cent of total revenues.

“The first-quarter results are a clear indicator of the growth we have achieved across all our three core businesses this year,” said Mohammad Alabbar, Emaar chairman. “Property sales in Dubai and other key international markets have gained momentum, a testament to our differentiating strength in offering the right property of choice for investors.”

Analysts suggest that the “flight to quality” will play itself out through the rest of the year. If it goes the distance, this will mean buyer interest coalescing around known master-developers and their off-plan releases. The preference is definitely there for the “known” entity, analysts add.

The coming quarter will see Emaar outline its plans for a retail cluster at the Dubai Creek Harbour, again expected to be a substantial commitment in terms of cost. For The Tower alone, the cost is projected to be Dh3.65 billion.

Some telling numbers

* Emaar has made gains in bringing down the cost of operations, with that for the first quarter of 2016 at Dh660 million, compared to the Dh814 million recorded during the fourth quarter of 2015.

* Property sales on their own fetched revenues of Dh1.97 billion, 32 per cent higher than the same period in 2015.

* Emaar records revenues when construction of a property is 20 per cent is complete. Subsequently, revenue is recognised on each per cent increase in construction. No revenue is recognised on the sale of the property off-plan with no construction.