Net profit was 716 million dirhams for the fourth quarter ended December 31, up from 274 million a year before and ahead of an average analyst forecast of 475.7 million in a Reuters poll.

"The strong growth was mainly driven by the development business but the performance of Emaar's hospitality segment also surpassed our expectations by 15 percent in terms of quarterly revenues," said Jan Pawel Hasman, associate vice president for equity research at EFG-Hermes in Cairo.

Emaar EMAR.DU, which had reported declining profit in each of the previous four quarters, said revenue fell 42 percent to 2.24 billion dirhams in the fourth quarter.

The company booked impairments of 92 million dirhams in the quarter against investment in Dubai Bank and deferred or stalled projects, far below the 417 million dirham provision in the same period in 2010.

Full-year net profit was 1.8 billion dirhams, down 27 percent from 2.45 billion in 2010. Revenues fell 33 percent to 8.1 billion in 2011.

RETAIL, HOTELS UP

Emaar, which operates the Armani-branded hotels and owns the mammoth Dubai Mall, said its retail business contributed 2.14 billion dirhams to annual revenue, up 13 percent. The hospitality & leisure business contributed 1.22 billion.

Retail and hospitality together accounted for 41 percent of 2011 revenues. Sales from international operations also boosted income, contributing 22 percent of total company revenues.

"Our strategy for 2012 is to further increase the share of revenues from global operations and enhance the proportion of profit from recurring revenue streams, including shopping malls and retail and hospitality and leisure," said Mohamed Alabbar, Emaar's chairman, in a statement.

Emaar's earnings bring further hope of stability to the battered real estate sector in the United Arab Emirates, after Abu Dhabi's Aldar Properties ALDR.AD also swung to profit on Monday.

The real estate market in the UAE is slowly recovering after prices plunged 60 percent from 2008 peaks. But house prices in Dubai are expected to drop another 5 percent this year, a Reuters poll showed last month.

Emaar said it handed over less than 1,000 real estate units in 2011, of which only 350 were in Dubai, far below the 3,500 units delivered in the UAE and internationally in 2010.

Emaar's shares ended 1.4 percent higher on the Dubai bourse before the earnings were announced.

Emaar is known to have about 3.75 billion dirhams of debt maturing within this year, most of which will be in the first half. Last year, it put up its prized asset, the Dubai Mall, to secure a $1 billion loan as it looked to refinance the upcoming debt amid difficult funding conditions.

Emaar's $500 mln 8.5 percent Islamic bond, or sukuk, maturing 2016 was bid at 104.475 on Tuesday, to yield 7.31 percent, according to Thomson Reuters data.

The yield has fallen about 7 basis points since Monday, but 11 points since last week's close, indicating demand for the bond.

(Editing by David Cowell)

• A Permanent Economic Emergency