Tuesday, April 01, 2008

Gulf Realty Companies likely to report strong growth in 2008

The realty companies in Gulf, whose profits have increased by more than 20% last year, are expected to continue their strong growth in 2008, remaining immune to global economic slowdown, maintaining favorable market conditions and foreign investments, say analysts.

A Real Estate Analyst, Stefan Schurmann, at EFG Hermes, said "The fundamentals for the Gulf region in 2008 are good, and this will help real estate developers in the region to post healthy profits."

Delivery of projects is happening, and residential units are being delivered and booked accordingly, and the realty companies are re-evaluating their land value and lowering interest rate, which is, in turn, motivating people to buy, he said.

The net income of 17, out of top 20 realty companies in the six member GCC region increased to 21%, while their combined assets increased to 55%, touching $46,98bn, according to Zawya Investor data.

Schurmann said that Gulf realty developers are benefiting from the global slowdown with foreign investors putting their money into the region. An increasingly sophisticated legal framework is also helping to attract international buyers.

The London-based MEED (Middle East Economic Digest) indicates that Kuwait, Bahrain, Saudi Arabia, UAE and Qatar are spending $1.45 trillion on an average on real estate projects.

The Gulf's largest construction market, the UAE, has approximately $223.8bn worth of realty projects under construction, with some of the main benefactors of construction boom.

Deyaar Development has seen a 29% increase in profit, touching $145.7million, with the value of projects touching Dh.8bn in 2207, as against Dh.2.4bn in 2006.

Union Properties had a 12% profit, touching $186.5mn, due to increase in profit margin from sales and management.

Emaar Properties, the largest realty developer in the region, has however, recorded only a small increase of 3.2% in profit, touching Dh.6.57bn last year, due to its diversification activities. Gowever, Emaar expects its profit to be in line with 2007 this year too, while a few analysts expect Emaar to perform even better.

In Abu Dhabi, Sorouh Real Estate and Aldar Properties posted strong gains with the property market continuing to boom. Aldar's profit soared to 29%, touching $342.3mn, while Sorough saw its profit climbing by 55%, touching $528.5mn.

Even the Saudi-based realty companies, involved in construction of 'economic cities' reported strong results, as demand for property in the Kingdom continued to grow.

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