Dubai’s Emaar Properties is searching for buyers for two hotels in its flagship development Downtown Burj Dubai, Arabian Business has learned.
The developer behind the world’s tallest tower is understood to be looking to sell off the Al Manzil and Qamardeen hotels, as well as other property assets in the Downtown area, sources said.The two four-star business hotels have been operated by African hospitality group Southern Sun since 2007.Such a sale would raise questions over Emaar’s liquidity, said Saud Masud, senior real estate analyst at Dubai-based Rasmala Investments.
“To make a sale at this point on one of its hospitality units I think may raise some questions around Emaar’s need to raise cash and liquidity right now,” he said. “Emaar’s business challenge right now is to make sure that they finish the entire roll-out in Dubai first, on the residential side, and then make sure that they have some international expansion story.”
The proceeds of the sale may be used to fund the completion of the developer’s unfinished projects in Dubai, he said.
“It comes down to short-term liquidity, to have something for the next 18 months they can grow, especially by first finishing Dubai residential.”
Emaar declined to comment when contacted by Arabian Business.
Dubai’s largest developer by market value was badly hit following the collapse of Dubai’s property market in late-2008, which wiped more than 60 percent off house prices in the emirate.More than half of construction projects in the city were suspended or cancelled as speculative demand waned and banks tightened lending.
Emaar was reported in November to be mulling the sale of its Dubai headquarters, alongside a number of the buildings within Emaar Square and Emaar Business Park, in a bid to tackle AED.8bn ($1.3bn) of debt due in 2011.The company’s Indian joint venture firm, in which it owns a 44 percent stake, in May denied reports it was planning to divest assets in India.
“India is one of the key markets for Emaar Properties PJSC, as part of its strategic expansion and growth plans, and we are committed to our joint venture operations in the country with MGF Developments,” said Emaar MGF in a company statement.
Emaar saw an 85 percent fall in its income from apartment sales during the second quarter, as demand for real estate continues to fall in the emirate.
Revenues from sale of apartments were AED265.6m ($72.3m) in the second quarter, compared with AED1.7bn in the same period in 2010, the developer said.
The developer saw a 69 percent drop in second quarter net profit to AED250m, its smallest quarterly profit in two years.