By Souhail Karam
Focus on low income accommodation, with prices lower than that of other units caused fall.
Saudi property developer Dar al Arkan said net profit fell 10 percent in 2009 after it focused on lower income apartments, seen as accounting for the bulk of a large housing deficit in the kingdom.
The company, Saudi Arabia's largest developer by market value, made $566 million in 2009, down from $629.29 million a year earlier.
The company posted a lower than expected 7 percent rise in net profit for the fourth-quarter of 2009. It made $123.64 million in the three months to end December, up from $115.5 million a year earlier.
Analysts were expecting a fourth quarter net profit of between $82.9 million and $176.1 million in a Reuters survey earlier this month.
In a statement on the bourse website, the company said: "The majority of the units sold (in 2009) were apartments ... The price of these units is less than that of villas which represented the majority of the mix of units sold in 2008."
Benoit Bellerose, the firm's chief financial officer, said the decline was normal because the firm's main source of income in 2009 was a giant project in the capital Riyadh aimed at targeting the middle and lower segments of the middle class.
Speaking to Reuters by telephone, he said: "This is just about the timing of projects. In 2008 we had a project that focused mainly on the middle of the middle range which is why profit was higher."
Earnings per share for 2009 fell to $0.52 down from $0.58 in 2008, adjusted for a 50 percent capital increase in July.
Operating profit in 2009 fell 12.3 percent to 2.32 billion riyals while it fell for the fourth quarter by an annual 2.9 percent to $136.76 million.
Revenues slid 2.6 percent in 2009 to $1.45 billion while annual costs fell 6.9 percent to $789.2 million.
There are no official figures on sales of housing units in Saudi Arabia.
The Saudi property market is less developed than in some of the neighbouring Gulf states due mainly to the lack of sufficient legislation on mortgages.
Saudi real estate is still the subject of great interest from regional and international investors who are drawn to the kingdom's rapidly growing population and the cash-laden government's efforts to reduce a rising housing deficit.
Only 30 percent of Saudis own a home and US consultancy Clayton Holdings Inc - which is helping set up mortgage lenders in Saudi Arabia - estimated in 2009 that the kingdom has a deficit of 2 million residential units rising by 200,000 annually. (Reuters)