Emaar Properties, the largest property developer in the region, reported its fourth quarter profits drop by 62 per cent to Dh274 million compared to the same period in 2009 after two partly-owned companies wrote down the value of their assets and costs rose.
The company took provisions of Dh417 million in the fourth quarter, more than double the same period in 2009, after Amlak Finance and Dubai Bank wrote down the value of their assets, an Emaar spokesman said.
"The provisions primarily relate to provisions made by both these entities in respect of their assets," the spokesman said.
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Amlak, which was once the largest lender to home buyers in the UAE but has been frozen for two years as it restructures, had until now refused to revalue almost Dh4bn of property investments and advance payments on unfinished developments. Emaar owns a 66 per cent stake in the company.
Emaar was also dealing with the rising cost of doing business, its income statement shows. While its revenues increased by 28 per cent to Dh3.8 billion in the final three months of 2010 from Dh2.98bn in the same period in 2009, its cost of revenues rose by 69 per cent to Dh2.6bn.
Still, analysts have pointed to Emaar as one of the healthiest property developers in the UAE because of its strong recurring revenues from hotels and malls. It reported net profits of Dh2.4bn for 2010, compared with Dh327m in 2009 when it wrote off massive investments in a US property company John Laing Homes.
bhope@thenational.ae