updated 4/15/2007 6:40:11 PM ET 2007-04-15T22:40:11

Dubai-based Emaar Propertiesthe largest Arab real-estate developer by market value, reported its slowest rate of profit-growth in the first quarter in at least two years as the U.S. housing market cooled.

The earnings missed even the smallest profit-forecast of four analysts polled by Reuters last month. Compared with the fourth quarter, revenue fell almost 30 percent.

Emaar said in an income statement revenue for the first quarter of 2007 was lower than the fourth quarter of 2006 due to a drop in sales by John Laing Homes, USA, from the fourth quarter.

Emaar bought U.S. homebuilder John Laing Homes for $1.05 billion in June at a time when the market for new homes was struggling. Annualized sales of new homes in the United States fell in February for a second straight month, to their lowest level since 2000.

The sales of single-family homes declined 3.9 percent to 848,000 in the 12 months to February 28, compared with 882,000 in the year to January 31, according to U.S. government data last month. Sales in 2000 were 793,000.

“The results are definitely below what the market expected,” said Mohammed Yasin, managing director at Emirates Securities, a brokerage in the United Arab Emirates. “This explains some of the reluctance of the shares to move up in the last few weeks.”

Dubai is the second-largest member of the oil exporting UAE federation and the first Gulf Arab emirate to open its real estate market to foreign investment, triggering a property boom.

Shares of Emaar fell 1.75 percent on Sunday. The stock was down 6.56 percent this year at Thursday’s close.

Revenue at the company, 90 percent of which is generated in the United Arab Emirates, soared 74 percent, spurred by sales at its $20 billion Burj Dubai, it said. Burj Dubai will be the tallest building in the world when it is completed next year, Emaar has said.

Dubai’s government took a majority stake in Emaar in March by exchanging land for $7.6 billion worth of stock.

The deal could increase Emaar’s land holdings in Dubai by 55 percent, giving the developer more room to expand at home until foreign projects start generating profit, analysts have said.

Earnings from foreign operations may contribute more to profit next year, Mohamed Alabbar, the company’s chairman was quoted as saying in the statement.

Emaar last year started selling properties in India, Pakistan and Egypt, three of the 14 countries in which it is developing residential, leisure and other projects worth $60 billion.

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