Dubai's Emaar Hit By US Housing Slump

Source : The Business Times, July 29, 2008

'Development properties' forces S$61m writedown

(DUBAI) Emaar Properties PJSC, the Middle East's largest real-estate developer, wrote down 165 million dirhams (S$61 million) related to its US unit in the second quarter, Al Mal Capital PSC said, citing an analyst call.

The company's gross profit included a writedown related to its 'development properties' at John Laing Homes, while goodwill was unaffected, Al Mal said over the weekend.

Any writedown of goodwill in the second half will be offset by increased profitability, the Dubai-based investment bank cited Emaar as saying.

Emaar bought Newport Beach, California-based John Laing in 2006 for US$1.05 billion, about a year after a five-year US housing boom peaked.

The nation is now in its worst housing slump since the Great Depression.

Emaar had goodwill of 2.5 billion dirhams for its US operations at the end of last year.

One third of this amount may be written down this year, Stefan Schurman, analyst at EFG-Hermes Holdings SAE, Egypt's largest investment bank, said in a note issued earlier this month.

The Dubai-based company expanded its land bank in Turkey by approximately 73,500 square metres in the second quarter, at a cost of 400 million dirhams, Al Mal said.

Emaar sold 73 per cent of the international units released in the second quarter, Al Mal said.

Emaar is building the Burj Dubai, the world's tallest tower, and plans to construct six hotels, a theme park as well as 1,200 apartments as part of the Las Vegas-style Bawadi project in the desert outside Dubai.

The company, in which the Dubai government is the largest shareholder, is expanding into countries including India and Egypt to become less dependent on its home market.

The developer's second-quarter profit rose 6.4 per cent as costs fell and revenue stayed almost unchanged. -- Bloomberg