Dar Al Majed Profit Drops 63% in Nine-Month Period

Riyadh, Saudi Arabia — Dar Al Majed Real Estate Co. reported net profit attributable to shareholders of 90.9 million SAR for the nine months ending September 30, 2026 — a sharp 63.5% decline from 249.1 million SAR in the same period a year earlier. Revenue fell 24% to 691.7 million SAR, and earnings per share dropped to 0.30 SAR from 0.83 SAR.

The primary driver was the absence of one-off items that inflated last year’s results: 106 million SAR in land sale profits and 47 million SAR in non-recurring investment property revaluation gains. Without those windfalls, the comparison is brutal — but also more honest about the business’s recurring earning power.

Quarterly Breakdown

The third quarter alone tells a harder story. Dar Al Majed posted net profit of 10.6 million SAR in Q3 2026, down 71.2% from 36.8 million SAR in Q3 2025 and down 74.5% from 41.7 million SAR in the prior quarter. Revenue fell 10% year-over-year to 195.2 million SAR and dropped 32.3% from the prior quarter’s 288.2 million SAR. Total comprehensive income turned negative at -23.8 million SAR for the quarter, compared to a positive 24.8 million SAR a year ago.

Gross profit collapsed 45.3% year-over-year to 43.1 million SAR in Q3, while operating profit fell 70.5% to 14.7 million SAR. The sequential drop from Q2 was equally steep — operating profit tumbled 73.5% quarter-on-quarter.

Key Drivers

• Property unit sales fell 14% year-over-year in Q3, weighed down by increased promotional discounts used to push sales volume.
• Commission revenue declined by 7.2 million SAR year-over-year in the quarter.
• Real estate development revenue surged 130% year-over-year in Q3, and rental revenue rose 37%, providing partial offsets.
• For the nine-month period, third-party development revenue grew 93% and rental revenue climbed 97% — the clearest signs of diversification progress.
• The prior-year nine-month period included 314.5 million SAR from land sales, a non-recurring revenue item that skewed the year-over-year comparison heavily.
• Investment property fair value changes contributed a modest 7.2 million SAR, representing 2.41% of capital.

What This Means for Investors

• Strip out the land sale and revaluation gains from the prior year, and Dar Al Majed’s underlying business looks weaker than headline comparisons suggest — but the comparison base is now cleaner going forward.
• Margin erosion is real. Gross margin in Q3 fell sharply as the company used discounts to move inventory, squeezing profitability even as it sustained sales activity.
• Growth in rental and third-party development revenue is a positive structural shift, but these segments are not yet large enough to replace the high-margin land sale income lost this year.
• Total shareholders’ equity held nearly flat at 1.13 billion SAR, up just 0.38% year-over-year — a sign of stability at the balance sheet level, but no meaningful capital growth for shareholders.

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THE SAUDI STANDARD’S VIEW: DAR AL MAJED’S RESET YEAR EXPOSES THE TRUE EARNING FLOOR

Dar Al Majed’s nine-month results represent more than a disappointing earnings cycle — they mark a structural inflection point for a real estate developer navigating the transition from opportunistic land monetization toward recurring, fee-based income. Investors must now assess whether the company’s underlying business can generate adequate returns without the benefit of windfall asset sales.

• THE BASE EFFECT TRAP

Last year’s outsized profits were built on non-recurring land sale proceeds and revaluation gains that created an artificially elevated benchmark. Now that those items have fallen away, the comparison period reveals a recurring earnings base that is considerably thinner than the headline figures once implied. Investors who anchored their valuation models to peak-year figures will need to recalibrate expectations against this more normalized baseline.

• MARGIN PRESSURE IS A STRUCTURAL CONCERN, NOT A SEASONAL ONE

The decision to deploy promotional discounts to sustain unit sales volumes signals that demand at current price points is not self-sustaining. When a developer sacrifices gross margin to maintain sales velocity, it typically reflects pricing power erosion rather than a temporary market soft patch. Until Dar Al Majed can restore pricing discipline, profitability recovery will remain constrained even if revenue stabilizes.

• DIVERSIFICATION IS REAL BUT INSUFFICIENT

The triple-digit growth in third-party development revenue and the near-doubling of rental income over the nine-month period confirm that the company is executing a deliberate pivot toward more durable revenue streams. However, these segments currently operate at a scale insufficient to compensate for the high-margin contributions that land sales previously provided. The strategic direction is sound; the pace of scaling determines whether investors are rewarded in a reasonable time horizon.

• BALANCE SHEET STABILITY LIMITS DOWNSIDE BUT SIGNALS STAGNATION

Shareholders’ equity holding near 1.13 billion SAR provides a measure of financial resilience and reduces short-term solvency risk for the company. However, near-zero equity growth combined with sharply lower earnings per share means capital is not compounding for shareholders during this transition period. For income-oriented investors, the absence of meaningful book value accretion warrants close attention to dividend sustainability.

Dar Al Majed’s current trajectory reflects a challenge common across Saudi Arabia’s real estate sector as it matures under Vision 2030: the shift from land-driven wealth creation to operationally intensive, recurring-income business models. Saudi Arabia’s housing expansion targets and urban development pipeline offer genuine long-term demand support, but capturing that opportunity requires developers to build the operational muscle — in leasing, services, and third-party development — to replace one-time asset gains. Dar Al Majed is on that path, but 2026 is serving as an honest reckoning with how far it still has to travel.