Emaar Sees Positive Flip in Earnings

Alabbar said that the $1.5-billion skyscraper would provide a 10 per cent yield for the developer. The landmark glass-and-metal clad tower is 90 per cent sold in a mix of residential units, offices and other space, offering a counterpoint to Dubai's financial woes.

“Crises come and go. And cities move on,” Alabbar told reporters before the official inauguration ceremony of Burj Dubai. “You have to move on, because if you stop taking decisions you stop growing.”

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The opening of the tower, which stands at the heart of a $20-billion downtown development close to Dubai's main business district, coincides with the day when His Highness Shaikh Mohammed bin Rashid Al Maktoum took office four years ago as Dubai Ruler.

The property giant will focus its efforts abroad and on non-property sectors such as hospitality and hospitals, Alabbar said, as a real estate crunch hits its home market. He ruled out considering a merger with the palm-shaped island developer Nakheel. Emaar late last year had called off a proposed merger with property units of conglomerate Dubai Holding.

Issam Galadari, chief executive of Emaar Dubai, at a media briefing, said: “All the studies which we made, we couldn't find a way ahead and it wasn't the right time for a merger at this time.”

The Emaar executives said that the launch of Burj Dubai was a positive move forward as the emirate's property prices stabilised, despite wider expectations for continued stress in Dubai's real estate sector.

“You have to ask why we are building all this. To bring quality of life and a smile to people and I think we should continue to do that,” Alabbar said. “Dubai is where our life is. We have beautiful long term plans for development in Dubai,” he said.

Some financial analysts remain concerned about the immediate outlook for the real estate market in Dubai after 2009 saw about 50 per cent wiped of the average value of homes in the emirate.

The occupancy rate at Burj Dubai may reach 75 per cent this year, with office leasing proving the biggest challenge for investors, said Roy Cherry, an analyst at investment bank Shuaa Capital PSC. While mainly residential, the over 160-story tower will include 37 floors of office and retail space.

“Those who bought with the intention of leasing will face a difficult time, because few companies today can justify paying premiums for luxury,” Cherry said.

“Burj Dubai is the most expensive square footage in the region and I'm not sure in the current downturn that will translate into strong residential or commercial demand, despite the prestige factor,” Saud Masud, a Dubai-based analyst at UBS AG, said.

Designed by Chicago-based Skidmore, Owings and Merrill, the structure overtook Taipei 101 as the world's tallest in February.

Emaar aimed to make the Downtown Burj Dubai area the city's new centre, benefiting from the development's proximity to the Dubai International Financial Centre, or DIFC, a tax-free business park that houses hundreds of international companies.

Emaar will start handing keys to the buyers of 900 apartments and offices in March, the company said in a statement. Emaar has sold about 90 per cent of the properties in the tower prior to its completion and much before the global financial crisis began.

Many buyers in the residential part of the tower are wealthy individuals from the Middle East and the sub-continent who bought apartments as vacation homes or as an investment, said Jesse Downs, director of research and advisory services at Dubai-based Landmark Advisory.

“They are people who can hold on to it comfortably for the next five to 10 years,” Downs said. “So even if apartments remain empty and lights switched off at night, that doesn't mean the units are for sale in the market.”

· abdulbasit@khaleejtimes.com

· With inputs from agencies