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Thu 12 Nov 2009 06:13 AM

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Pearl Qatar developer upbeat on Q4 performance

United Development Co president says company is in talks on projects worth up to $3bn.

United Development Co (UDC), which built a pearl-shaped island in Qatar, expects fourth-quarter profit to be "at least as good" as the third and was in talks on projects worth up to $3 billion.

UDC President Khalil Sholy told Reuters the conglomerate - the main developer on the estimated $20 billion man-made island - expects its fourth quarter to be driven partly by payments for housing units on the island and income from subsidiaries.

Qatar, the world's largest exporter of liquefied natural gas, has been less affected by the global financial crisis than Gulf Arab neighbours as its economy continues to grow on the back of revenues from oil and gas projects.

Sholy said he was "optimistic" about the fourth quarter. "We think it's going to be at least as good (as third quarter)."

UDC posted a third-quarter profit of 79.8 million riyals ($22 million), according to Thomson Reuters data.

Qatar property prices dropped by about 30 percent in the first half of the year. But the economy could grow 7 percent in its 2009-10 fiscal year and 16 percent the following year, the country's ruler said on Nov. 3.

Sholy said there was still a shortage in supply in the Gulf Arab state as it has not been "overbuilt".

UDC's real estate unit, The Pearl, is the conglomerate's first foray into property investment. The Pearl has said that 65 percent of the project, which covers 4 million square metres, has been put on the market with 90 percent of that sold.

Foreign investors have bought the majority of apartment units, Sholy said, adding the remaining 35 percent of the project would go on the market over the next 18 months.

The Pearl project - one of several mammoth infrastructure projects in the Gulf Arab region including Dubai's palm-shaped islands - creates over 32 kilometres of new coastline and is slated to have more than 40,000 residents by 2011.

"The overall value of the island is estimated above $20 billion but what is left and owned by UDC would represent more or less 35 percent of this amount," Sholy said.

Sholy said the company was eyeing new projects in the Middle East and North Africa which would be joint ventures involving property development, infrastructure and utilities.

"We are looking actively at two projects which are in the ballpark figure of $2-$3 billion in terms of investment," he said. "It's a joint decision and we are negotiating actively with the respective governments and we are hopeful that within the next three to six months something will come out of it."

Sholy, who declined to provide detail on the projects, said they would be funded through a combination of debt and equity.

"We will look at the markets, and we expect an equity of plus or minus anything between 30-40 percent, and the rest would be through commercial banks and investment institutions," he said. (Reuters)

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