Dubai: Emaar Misr’s net profit soared 283 per cent during the first half of the current year, the developer announced on Tuesday. Profits has reached to 522 million Egyptian pounds (Dh245 million), according to the Egyptian Accounting Standards (EAS) — the country’s regulator.
Revenue increased 56 per cent, as the company sold 748 residential units. The committed net sales has increased by 20 per cent to 3.9 billion pounds in the first half of 2015.
These figures were announced a day after the Chief development officer and the Chief investment officer resigned following the property’s lacklustre flotation on the Cairo stock market. “The Intial Public Offering (IPO) did not perform well as expected, the evaluation was going down and for one of Egypt’s main real estate to perform so badly, it had its effects,” said Hossam Abou Gabal, an analyst with Middle Eastern Financial outlet MEED.
JLL, a leading real estate investment and advisory firm released a report that said within the residential sector in Egypt prices are expected to continue to rise in New Cairo. According to the report, the improvement in the market is due to investments from Saudi Arabia and the UAE.
“The boom is due to the Sharm Al Shaikh Investment conference back in March. A lot of the large GCC corporates have announced big investments,” Abou Gabal added. Many of these investments are still not materialised. “There have been a lot of focus on tourism and hospitality and that is because the Egyptian government realised the importance of that sector in the last few years,” Abou Gabal commented.
According to Emaar Misr, the Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) has reach higher by 96 per cent, reaching 506 million pounds [Dh236 million]. The total assets, starting June 30, were 16.271 billion pounds, as the Company’s net cash position, excluding funds from the IPO, remained strong at 0.9 billion pounds.
“The quarterly revenue figures for individual developers will bounce around greatly from one quarter to the next. The strong performance of Emaar Misr will be due to specific factors relevant to that developer (most probably a strong quarter of sales in newly launched projects) and does not represent a ‘sudden boom in the market as you suggest,” said Craig Plump, Head of Research at JLL.
According to JLL, four developments have been completed across the residential market. That has added an extra 2,000 units to the residential supply in the second quarter. JLL expects more residential units to be added by the second half of 2015. “The Cairo market is however improving — with all sectors now in the upturn stage of its market cycle — there are two basic reasons for this — political stability and improving economy,” Plump added.
Emaar has a number of high end projects in Egypt. According to analysts there is a market for these luxurious projects as more Egyptians are looking to move outside the Capital. However, for a large factions of the society, the affordability of these housing is questionable as there is a shortage of middle income housing. Emaar Misr; however, said that there is a market from both local and foreign who are interested to invest in their housing.
“To deliver good quality products in line with end user demand and at a price that is attractive to potential purchasers. Confidence plays a major part in the Egyptian market and developers need to create confidence, trust and certainty among buyers by consistently delivering quality products on schedule,” Plump added in response to how companies as Emaar could perform better.
Emaar IPO
Emaar Misr sold 13 per cent of its shares in June. It also raised 2.28 billion Egyptian pounds in an initial public offering in June which priced at 3.8 Egyptian pounds per share. According to Reuters, it was the largest offering on the Egyptian exchange since 2007. On Monday, August 3rd, shareholders submitted a total of 487.317 million shares. The company’s stock have done so poorly at 3.43 Egyptian pounds on Monday.
— The writer is a trainee at Gulf News.