Emaar margins up as Burj sales kick in

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COSTS FALL: Emaar said construction costs fell in the first quarter as its $20 billion Burj Dubai project nears completion. (Getty Images)

Dubai-based Emaar Properties said first-quarter sales of apartments held steady though costs associated with their construction fell as its $20 billion Burj Dubai project neared completion.

Emaar, the largest Arab real estate developer by market value, sold 1.84 billion dirhams ($500.9 million) of apartments in the three months to March 31, though their costs declined 11.3%, according to full first-quarter earnings results released late on Sunday.

"Emaar gives the split of condominium sales separately with 1.84 billion dirhams, basically unchanged, but on an improved margin of 43% compared to 35% for the same period last year," Cairo-based investment bank EFG-Hermes said in a note to investors on Monday. "This confirms our view of Burj Dubai Downtown high margin sales kicking in."

The projects include the world's tallest building and the world's biggest shopping mall, due for completion either late this year or early next.

Sales of houses rose almost 27% to 1.08 billion dirhams, while land sales fell 70% to 258.4 million dirhams, Emaar said.

Last month, Emaar posted its second decline in profit in three quarters as revenue stagnated, and marketing and selling costs rose. It missed forecasts.

RELATED: Emaar profit drops again

Net income in the three months to March 31 fell 3.8% to 1.66 billion dirhams, annualised earnings per share of 1.08 dirhams, compared with 1.72 billion dirhams in the year-earlier period, Emaar said at the time.

EFG-Hermes on Monday maintained its short-term "accumulate" and long-term "buy" ratings on Emaar and said the company was well on track to achieve its target of 10% to 15% of revenue growth by 2010.

The investment bank, which has a price target of 18.5 dirhams on the largest Arab real estate company by market value, said it did not expect to change its 2008 earnings estimates on the stock.

Shares of Emaar were up about 1.3% at 11.75 dirhams by 0749 GMT in Dubai. (Reuters)

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