In the wake of a triumphant series of announcements at the recent Cityscape Global event in Dubai, Construction Week runs the rule over the region’s biggest property developers.
Although the talk in UAE’s property markets over recent weeks has been about a slowdown in the market, with the amount of properties changing hands in Dubai in August falling by over 20 percent, there doesn’t seem to be too much of a halt in the progress of its developers.
Indeed, although CBRE reported a 1 percent drop in rental values during the past quarter, this was partly due to the fact that developers are completing schemes that had been stalled for many years and launching whole new waves ahead of further anticipated population increases in the run-up to 2020.
The prices of completed properties are still rising – up by 23 percent year-on-year in the third quarter, according to new CBRE research. Moreover, as prime areas like Dubai Downtown and Dubai Marina reach the kind of peak prices experienced during the last boom in 2008, some of the fastest growth has occurred in secondary areas.
Against such a backdrop, it is perhaps unsurprising that some of the biggest gainers in this year’s list in terms of share price increases are companies like Union Properties (290 percent increase) and Deyaar (147 percent), who hold major assets or land banks in non-prime areas such as Motor City and Business Bay respectively.
Indeed, four out of five of the developers who have witnessed the biggest rise in their share price are based in the UAE, while the other – Kuwait’s National Real Estate Co – holds a major asset here in the form of the Reem Mall currently being worked up at Abu Dhabi’s Reem Island.
Their stock has continued to rise as a result of strengthening balance sheets which, in turn, is giving them greater financial muscle and an ability to invest further in their future pipeline.
Methodology: This is a ranking of developers whose shares can be publicly-traded on any of the GCC’s stockmarkets, or on the London Stock Exchange. It therefore excludes a number of major developers whose shares remain in private hands.
The ranking has been based on the size of each company’s market capitalisation, with share values taken after the close of markets on Tuesday, 7 September.
First up at number 10 is Qatar's United Development Company...
10 - United Development Company
Market cap: $2.69 billion 12-month share price: 50 percent
United Development Company’s most notable development is its flagship urban project The Pearl-Qatar. The master developer of The Pearl-Qatar, UDC was established in 1999 and listed on the Qatar Exchange in June 2003.
The Doha project has faced its fair share of challenges since construction began in 2004, but master developer UDC has confirmed 100 percent of the infrastructure of the man-made island, as well as the Porto Arabia, Qanat Quartier and Medina Centrale districts, is now complete.
The first residents moved onto The Pearl-Qatar in 2009 and there are now around 12,000 people living in a number of different communities. UDC is working alongside 15 other developers on bringing the remainder of projects forwards.
“We have overcome most challenges that had affected the real estate market globally, including the global financial crisis of recent years,” said a UDC spokesman.
“True, there were delays, but all infrastructure work at The Pearl-Qatar has been completed.”
There are also currently around 200 restaurants and retail units, with more due to open soon. The Pearl-Qatar spans almost 4 million m2 and is the first land in Qatar to be available for freehold ownership by foreign nationals.
The project is set for overall completion by the end of 2018.
Roger Dagher, director of corporate communications at UDC, said that as a mixed-use urban development, “The Pearl-Qatar offers a variety of real estate investment opportunities”.
At 9 is Makkah Constriction and Development...
9 - Makkah Construction & Development (Down 4)
Market cap: $3.71 billion 12-month share price: 34.1 percent
Charged with developing the area adjacent to Makkah’s Grand Mosque, the company has been working on various projects including retail and hotel towers.
Net profit during the second quarter of the year was 97 million riyals compared to 111 million riyals for the corresponding quarter of the previous year, a decrease of 12.6 percent.
Gross profit also dropped by just over 9 percent for year on year comparisons, but was up 64.6 percent on the previous quarter.
The reason for the decline during the current quarter compared with the same quarter of the previous year was lower revenues and occupancy the company said.
It added that the rise in quarterly figures was due to the number of people visiting in Sha’ban and Ramadan.
At 8 is Emaar The Economic City...
8 - Emaar The Economic City (Up 1)
Market cap: $4.16 billion 12-month share price: 15 percent
A near doubling of its market cap in the past 12 months is an indication of the success that Emaar The Economic City has had in moving forwards the development of King Abdullah Economic City.
Established in September 2006, it is responsible for the 168k square metres development near Rabigh, north of Jeddah. It is the biggest of four major industrial cities being planned for Saudi Arabia and will include a port, industrial zone, residential projects, commercial offices, educational institutions and leisure attractions.
Within the past 12 months, King Abdullah Economic City has had a new masterplan approved that reorganises the city’s office core around a new gateway provided by the Haramain High-Speed Rail terminal as well as providing more green space and natural lagoons.
Its key asset is its port, however, and after it began operations at the turn of the year – giving it the capability to handle an initial 1 million containers per annum – a decision was taken to ramp up development at the neighbouring Industrial Valley. It takes up around one-third of the city, at 63k square metres.
Once fully developed, King Abdullah Economic City’s port will be one of the five biggest in the world, with a capacity to handle 20 million containers. It will be spread over 14k square metres of the city.
At 7 is Qatar's Barwa Real Estate...
7- Barwa Real Estate (Up 1)
Market cap: $4.37 billion 12-month share price: 76.9 percent
Barwa began operations in 2006. The developer is one of the country’s listed real estate firms, although its portfolio has shrunk recently as a result of a number of asset sales.
The company has sold a chunk of assets this year to Qatari Diar – the real estate investment business owned by Qatar’s sovereign wealth fund, which also controls a 45 percent stake in Barwa.
It finalised a deal to buy 95 percent of the Barwa Commercial Avenue mixed-use scheme for almost $2.5 billion in July – part of a package of asset sales which, alongside the nearby Barwa City residential scheme and the Al Sadd office towers project, has brought in around $7.1 billion that Barwa has said it will use to pay down debts.
Barwa has also continued to move forward with new projects, selling out the first phase of its Dara project in Lusail City at Cityscape Qatar and appointing contractors to build the second phase of the Barwa Al Baraha project providing worker accommodation on the outskirts of Doha. However, it also abandoned plans for the $5.5 billion offshore Oryx Island.
At 6 is Dar Al Arkan Development...
6 - Dar Al Arkan Development
Market cap: $4.45 billion 12-month share price: 67.5 percent
Dar Al Arkan’s chairman Youssef Al Shelash has ambitious plans – not only in Saudi Arabia but also to oversee the development of a couple of overseas projects in Europe.
The company, which witnessed an 8 percent increase in net profit for the first half of the year to $98.5 million, credited its improved financial results on an ability to sell homes at higher margins as a result of the improved development status of some projects and superior locations.
The company, which has raised around $700 million over the past 12 months with a view to embarking on more development projects, has also recently had its credit status upgraded by ratings agency Moody’s to Ba3, with stable outlook.
Moody's said that the rating reflected the strength in the operating and business environment including supportive macro fundamentals in the Kingdom of Saudi Arabia, the company’s significant value in assets with its land bank held at a book value of $45 billion and investment properties valued at $960 million, as well as its conservative financial policy.
At 5 is the UAE's Damac Properties...
5 - Damac Properties (NEW ENTRY)
Market cap: $4.55 billion 12-month share price: NA
Established in 2002, it’s been a very big year for Damac Properties as last December it became the first real estate company from the Middle East region to list on the London Stock Exchange the offer of Global Depository Receipts, although it is currently in the midst of seeking a dual listing on the Dubai Financial Market.
Within the past few weeks alone the firm has made a string of new announcements, including a new 1,250-key luxury Paramount Hotel Downtown Dubai – its fourth hotel project – a second Trump International golf course in Dubai set in the 55 million ft2 Akoya Oxygen project and the securing of naming rights to the Dubai Marina Metro Station.
Niall McLoughlin, senior vice president, Damac Properties, told Construction Week after the success of the 42 million square metres Akoya by Damac project at Dubailand, “Akoya Oxygen came as a logical continuity to this brand”.
Damac Properties is active in the UAE, Qatar, Saudi Arabia, Iraq, Jordan and Lebanon.
“We recently completed our first project outside of Dubai – Al Jawharah in Jeddah, KSA and continue to develop across the GCC,” McLoughlin continued.
“We have always stated that the majority of our projects will continue to be based in our home of Dubai. However, we continue to seek opportunities in other markets which can grow our luxury brand in areas which are mutually beneficial.”
At 4 is Abu Dhabi's Aldar Properties...
4- Aldar Properties
Market cap: $8.81 billion 12-month share price: 86.8 percent
Aldar is very much part of Abu Dhabi’s growth and has developed some of the capital’s most iconic projects, such as the F1 facilities on Yas Island, the Shams Abu Dhabi community on Reem Island and Al Raha Beach.
Residential communities account for half of its assets, with retail property representing a third and the remainder split between commercial and hospitality. The company boasts a land bank of more than 77 million square metres and, since a merger with Sorouh Real Estate was completed in June 2013, it has considerably strengthened its financial position, as well as launching $1.36 billion of new projects.
The firm is also focussing more on recurring revenues from leisure, hospitality and retail including the new Yas Mall.
At 3 is Saudi Arabia's Jabal Omar Development...
3 - Jabal Omar Development
Market cap: $12.9 billion 12-month share price: 53.2 percent
Jabal Omar Development was initially set up to invest $3.2 billion in projects located at the holy city of Makkah.
The remit includes 40 residential towers to accommodate 160,000 Islamic pilgrims, and a prayer area for 200,000 worshippers.
Accommodation options will include two five-star hotels with 935 rooms and six three-star hotels with 1,255 rooms. Residential buildings will house 100,000 people along with 520 restaurants and 4,360 commercial and retail units.
This year saw the opening of the 1,743-room Anjum Hotel-Makkah, which is now the largest hotel in the Middle East in terms of inventory. It also marks the launch of the first phase of the Jabal Omar real estate project.
In February, the company awarded a $613 million contract to build the fourth phase of the huge towers project near the Grand Mosque in Makkah to Ruwad Construction Company.
The fourth phase of the project consists of three podiums and seven hotel towers with a total built-up area of around 320,000 square metres. It will be delivered over a three-year period to conclude in January 2017.
Taking second place is Qatar's Esdan Real Estate...
2 - Ezdan Real Estate (Down 1)
Market cap: $14.5 billion 12-month share price: 13.5 percent
This real estate giant has reach across the region thanks to its history stemming from the 1950s. As expected the company is capitalising on the boom in Qatar’s property market. Leaving speculation over the final destination for the 2022 Wold Cup aside, the country is noting considerable uptake in projects and Ezdan Real Estate is at the heart of many of them.
Year-on-year sales jumped by nearly a third in June, according to figures released by the company, with land purchases making up an increasing proportion of transactions.
Of the 627 deals struck in June, 446 were for plots of land, indicating increased activity from developers rather than sales of completed units or resale activity.
Ezdan Holding has a diverse investment strategy and is involved in numerous sectors aside from real estate.
At number 1 and taking the top spot is Dubai's Emaar Properties...
1- Emaar Properties (Up 1)
Market cap: $20.9 billion 12-month share price: 133.5 percent
Claiming the top spot, Emaar Properties is one of the most significant presences in the real estate sector of the Middle East, North Africa and Asia.
The company has handed over 37,500 residential units and major schemes like Dubai Marina Mall (pictured, above) since 2001 and boasts more than 690,000 square metres of revenue-generating assets.
Currently, more than 60 percent of the company’s revenues come from its shopping malls and retail, hospitality and leisure subsidiaries, and international operations, hence the announcement at the end of August that it was proceeding with the sale of a 15 percent stake in Emaar Malls Group via an IPO.
Emaar Properties Group earned $2.81 billion in revenues in 2013 and a net profit of $700 million. In the first half of 2014, revenues were down slightly to $1.38 billion, with the malls arm contributing $340 million of this.
The IPO is likley to generate $1.6 billion for Emaar Properties, which it largely plans to return to shareholders. It will give the malls arm a market capitalisation on its own of $10.3 billion. Demand for its shares was huge, with the offer more than 20x oversubscribed by individual investors and 30x by institutions.
Mohamed Alabbar, chairman of Emaar Properties, said: “We are delighted that the landmark initial public offering of Emaar Malls (EM) has been so successfully received by both institutional and individual investors. EM has performed very well across the business in the last five years.”For all the latest construction news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.
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