LETTER TO SHAREHOLDERS

“The high-point in our growth story last year was the successful IPO of our malls business.”


TO OUR SHAREHOLDERS,

On behalf of the Board of Directors, I thank you for your support in defining 2014 as an extraordinary year for Emaar Properties.

Your unwavering confidence inspires and enables us to fulfil our core purpose of creating long-term value for all our stakeholders, and in underlining Emaar as an organisation that earns trust and goodwill, anywhere we go and in everything we do.

We sustained a robust tempo of growth through 2014. Our new property launches recorded strong investor response, particularly from end-use home-owners, highlighting the growing maturity of Dubai’s property market. We also committed ourselves resolutely to handing over homes and offices in all our key markets. This, in turn, enhanced our credentials in project delivery.

The high-point in our growth story last year was the successful IPO of our malls business. In 2000, we set history as the first listed property company in Dubai Financial Market. Last year, we marked another milestone with the truly international IPO of Emaar Malls Group through a book-building process, the first-of-its-kind undertaken by a company in the UAE.

The record-breaking IPO, with total orders of over AED 172 billion (US$ 46.8 billion), underscored the tremendous international institutional and retail investor confidence in Emaar.

And as we promised to our shareholders, we added the proceeds of the IPO to the total dividend that we distributed last year, an impressive AED 17.12 billion (US$ 4.66 billion). This is a record in dividends issued by a Public Joint Stock Company in the region, a strong testament to our continued commitment to you, our shareholders.

An 18-year-young company, we have consistently focused on staying agile, alert, sharp and flexible.

When we commenced our journey in 1997, our motto was ‘shaping the future.’ Today, we are an integral part of the future that we envisaged for our city, led by dynamic vision of His Highness Sheikh Mohammed bin Rashid Al Maktoum, UAE Vice President and Prime Minister and Ruler of Dubai. As His Highness reminds us, to be successful “one does not put off today’s work for tomorrow but starts tomorrow’s work today.”

That outlook - to building our future today - continues to be the central credo at Emaar, as we gain speed, scale and inspiration from the positivity and dynamism of Dubai, today a global hub for business and leisure.

The city is now galloping into the future with massive preparations to host the Expo 2020 Dubai, and to achieving the Dubai Plan 2021 of establishing itself as a pivotal hub in the global economy.

Creativity, innovation, smart technology and partnerships are the hallmarks in this journey, and we are committed to all these, as we enter a new era of growth led by valuable joint ventures, world-class project management, high quality delivery and superior customer service.

In this, your continued support will be our driving force. With over 215 Million SQM of land bank in Dubai and international markets, Emaar has strong fundamentals. We have built our total asset to over AED 74 billion (US$ 20 billion) with a staggering market value of AED 151 Billion (US$ 41 Billion) as at 31st December 2014, making it one at the largest real estate companies in the world. The company has more than 690,000 sq m of recurring revenue generating assets apart from 13 hotels with over 1,900 rooms.

In 2014, Emaar further established the success of our business diversification with the positive growth of our real estate business as well as strong recurring revenues from our shopping malls & retail and hospitality & leisure businesses.

Our annual revenues in 2014 were AED 9.893 billion (US$ 2.693 billion) and net operating profit was AED 3.350 billion (US$ 912 million), a 30 per cent year-on-year growth. Emaar’s shopping malls, retail and hospitality businesses contributed over 54 per cent of the total revenue, at AED 5.367 billion (US$ 1.461 billion), 12 per cent higher than in 2013.

Our international operations also recorded robust growth with revenue at AED 1.899 billion (US$ 517 million), 19 per cent of the total revenue – and a growth of 63 per cent over 2013.

Delivery Track-record

Highlighting our emphasis on project delivery, our property business recorded total revenues of AED 4.526 billion (US$ 1.232 billion) in 2014. Emaar has handed over 38,600 residential units including more than 22,000 apartments and 16,600 villas in Dubai and other international markets.

As the bellwether property company of Dubai, we continued to dominate the city’s property landscape, having handed over 33,000 residential units, including over 20,500 apartments and around 12,500 villas. Emaar has also delivered 2.5 million sq. ft. of commercial real estate across its global markets including more than 1.8 million sq. ft. in Dubai.

In 2014, Emaar marked several milestone property launches including Boulevard Crescent, Boulevard Point, Vida Residence Downtown Dubai, Opera Grand in The Opera District, Boulevard Heights – all in Downtown Dubai; and Aseel, La Avenida 2, Lila, Rasha, Yasmin and Samara in Arabian Ranches. We recorded exceptional demand for these project launches, with total value of sales in Dubai at over AED 12.3 billion(US$ 3.35billion).

In international markets, Emaar handed over residences in key markets including Egypt, Saudi Arabia, Turkey, Lebanon and Pakistan, among others. New overseas project launches included The Address Residence Istanbul by Emaar Turkey; Emaar Square, a dedicated commercial precinct in Jeddah Gate, Kingdom of Saudi Arabia; and other master-planned communities in various markets.

Underlining the strong partnerships we foster to supporting Dubai’s growth, Emaar launched the waterfront Dubai Creek Residences in Dubai Creek Harbour at The Lagoons, developed jointly with Dubai Holding, and Mulberry Park Heights in Dubai Hills Estate, a joint venture with Meraas Holding.

"The Dubai Mall, defined itself once again as the world’s most visited retail and lifestyle destination welcoming over 80 million visitors in 2014."

Strong Economic Impact

Among the core sectors that contribute to Dubai’s economic growth are retail, tourism and hospitality. Emaar contributed significantly to these sectors through its malls and hospitality assets, which served as magnets for global travellers.

The Dubai Mall, our flagship asset, defined itself once again as the world’s most visited retail and lifestyle destination welcoming over 80 million visitors in 2014. This is ahead, by far, of global destinations such as Times Square, New York City; Disneyworld’s Magic Kingdom Orlando and Eiffel Tower in Paris.

The visitor arrivals also contributed to increased retail sales by tenants in The Dubai Mall, which at AED 16 billion (US$ 4.3 billion), is about 5 per cent of Dubai’s gross domestic product of 2013. Retail tenant sales across the entire Emaar Malls portfolio was over AED 18 billion (US$ 4.9 billion) in 2014, an increase of 14 per cent compared to 2013.

With a total GLA of about 6 million sq ft and GLA occupancy rate of 95 per cent, Emaar Malls recorded 13 per cent growth in revenue to AED 2.708 billion (US$ 737 million) in 2014, while net profit gained 23 per cent to AED 1,351 million (US$ 368 million), year-on-year. Revenue from The Dubai Mall accounted for about 82 per cent of the total at AED 2.225 billion (US$ 606 million).

Emaar Malls is now listed on Dubai Financial Market following the IPO that won us the ICAEW Middle East Accountancy & Finance Excellence Award in the ‘Corporate Finance Deal of the Year’ category in 2014.

The second edition of Vogue Fashion Dubai Experience, organised by The Dubai Mall and Vogue Italia, attracted the world’s who’s who in the fashion world, further defining Dubai as one of the world’s fashion capitals. To continue to build momentum and to meet future demand, Emaar Malls is currently expanding The Dubai Mall’s Fashion Avenue, which brings the largest number of high-end international fashion brands under one roof, by one million sq ft built up area to welcome a larger assortment of leading fashion brands.

Our shopping mall assets have created sustained positive economic impact by attracting international retail investments, creating thousands of new jobs and supporting the city’s hospitality and aviation sectors.

The successful IPO of Emaar Malls marks the success of our strategy to monetise our core assets and develop our subsidiaries as standalone profit centres. We have similar ambitions for our hospitality & leisure business too, which recorded revenue of AED 1.681 billion (US$ 458 million) in 2014, an 11 per cent year-on-year growth.

Emaar Hospitality Group is today one of Dubai’s leading hotel operators with three market leading hotel brands – The Address Hotels + Resorts, Vida Hotels and Resorts and the newly launched Rove Hotels (developed jointly in partnership with Meraas Holding), a contemporary mid-market lifestyle hotel brand intended to provide value hospitality experience to the global traveller.

The Address Hotels + Resorts, voted ‘Best Hotel Chain in the Middle East,’ at the Global Traveler Awards 2014, recorded an average occupancy of 85 per cent, higher than industry-average. We have further strengthened its international footprint with hotel and serviced residence projects in Turkey, Egypt, Nigeria and Kenya.

While Vida Hotels and Resorts has unveiled its second property, Manzil Downtown Dubai, Rove Hotels plans to roll out 10 properties across central locations in Dubai and the region by 2020, in time for the Expo 2020 Dubai.

"Our shopping mall assets have created sustained positive economic impact by attracting international retail investments, creating thousands of new jobs and supporting the city’s hospitality and aviation sectors."

Delivery & Service

We achieved exceptional sales in the past three years. Our sales from 2012 until 2014 amounted to AED 40,559 million. For the next few years, our strategy will be to create sustained value for our shareholders by focusing on world-class project delivery in Dubai and our international markets.

As Dubai builds its future as a smart, sustainable city and a preferred place to live, work and visit, we are creating a fresh template for the company’s sustained growth.

In today’s maturing property market, our priority is to manage and hand over our projects efficiently through our team of experienced professionals and talented youth who bring new thinking and creative approaches for tomorrow’s world.

We will continue to develop prime real estate assets in our homemarket of Dubai and other high-growth international markets, and also strengthen our competencies in shopping malls & retail, and hospitality & leisure.

In tune with the incredible advancements in information technology and the enormous reach of social media networks, we will sharpen our focus on understanding and analysing customer behaviour on a regular basis and implement proactive customer-service strategies.

In our road ahead, we will uphold our core strategy of developing quality-driven projects, timely delivery and excellent customer service to generate sustained value for our shareholders.

This will be our biggest differential, setting us apart as one of the world’s most valuable and admired companies.


Mohamed Alabbar
Chairman
Emaar Properties