Emaar's US unit profits despite subprime crisis

SMALL PROFIT: Emaar said John Laing would post profit this year despite the subprime crisis.

Dubai's Emaar Properties, the largest Arab developer by market value, expects its US housing unit to report a small profit this year despite subprime woes, chairman Mohamed Ali Alabbar said on Monday.

The company has no immediate plans to buy back its shares although it has approval to purchase up to 10% of its stock, Alabbar told newswire Reuters in an interview.

Emaar generates about 85% of its revenue from property sales in Dubai and most of the remainder comes from its US homebuilding unit, John Laing Homes.

"John Laing, interestingly enough, their price point is close to about $400,000 a home. Subprime buyers, they are the $200,000, $220,000 guys. But of course the liquidity in the market has affected everybody," Alabbar said.

"The US operation will still show a profit this year but small profit," said Alabbar, who is in India in connection with the planned initial public offering (IPO) of its Indian joint venture Emaar MGF.

The Indian venture hopes to raise up to $1.8 billion next month to buy land, construct buildings and pay loans and hopes Indian investors would take a long-term view and not be rattled by the sharp 7.4% fall in Indian shares on Monday.

Emaar's own shares tumbled nearly 7% on Monday, its biggest one-day drop in 14 months, as foreign investors sold shares due to a dampened US economic outlook.

Alabbar said the company had no immediate plans to buy back its shares although it had won approval from the UAE stock market regulator to buy back up to 10% of its shares.

"No, we are not buying back shares but as a stock exchange rule, you have to renew your approval to buy in case you want to buy. So we apply - in case shares go down and we think it's good value for shareholders, we buy back," he said.

He did not say what price would be an appropriate for a buy-back.

"I have no idea. Our board and committees have to look at that... There are no immediate plans."

Alabbar said he expected profits from most of its foreign ventures this year, including Morocco, Saudi Arabia, Egypt and Turkey.

He said its business in Libya was well on track although there were some changes in the systems and procedures.

"We have to give them room. They're adjusting their own bureaucracy, their own systems. Otherwise everything is going well."

In Morocco, Emaar is helping develop at least 5.7 billion dirhams of residential and leisure projects, and in India $4 billion of projects with partner MGF Developments of India.

In Saudi Arabia, affiliate Emaar Economic City is developing a Red Sea coast residential, commercial and leisure district at a cost of at least $26.6 billion. (Reuters)

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