By Souhail Karam
UPDATE 1: Saudi's largest developer by market value posts lowest growth since going public.
Dar al Arkan Real Estate Development Co, Saudi Arabia's largest developer by market value, posted a 2.6 percent rise in its fourth-quarter net profit, the lowest growth since going public in late-2007.The company made 433.2 million riyals ($115.51 million) in the three months to Dec. 31 of 2008 up from 422.4 million riyals ($112.63 million) a year earlier and down by almost 40 percent from the third-quarter of 2008, it said in a statement on the Saudi bourse website on Wednesday.
The company did not explain the quarter-to-quarter decline in profit.
Dar al-Arkan, which caters mainly to the middle-class market, raised 3.33 billion riyals in an initial public offering in December 2007 that was more than three times oversubscribed.
Chief Financial Officer Benoit Bellerose said the weak annual growth in fourth-quarter profit was due to "the seasonal nature of the business".
"In some quarters we put new units up for sale, in others we only seek to sell what is available for sale," he told Reuters.
He dismissed any link with the global liquidity crunch.
"Our sales are stable ... The fundamentals have not changed with respect to the economy and to demand on housing in Saudi Arabia", Bellerose said.
"There is a shortage of housing in the kingdom and that remains the case. Affordability has not been affected recently ... (but) there has not been many job losses here", he added.
Record inflation and a sharp downturn in the local bourse have eroded Saudis' disposable income. The local market does not offer a wide range of financing options for property buyers.
Newspapers, including al-Eqtisadiah and al-Riyadh, have reported that land and property prices started to ease in the third quarter as banks tightened lending to realtors.
Shares of the developer rose as much as 3.5 percent after the earnings were announced.
Real estate firms in the world's biggest oil-exporting region have been expanding before a six-year rally in oil prices was brought to a grinding halt in the fourth-quarter of 2008. (Reuters)