Fourth-quarter profit at the Dubai developer Nakheel fell by 28.7 per cent, company figures show, as Dubai’s housing market continued to slow.
According to figures provided by Nakheel, profit for the three months to the end of December last year fell to Dh770 million from Dh1.08 billion a year earlier.
Nakheel, which is owned by the Dubai government, did not provide figures for its turnover during the period or any detailed breakdown of how its profit was achieved. It did not give any reason for the quarterly fall in profit.
The company said that profit for the full year rose by 19 per cent to Dh4.38bn, up from Dh3.68bn in 2014, as it handed more than 847 homes to customers across its projects in Palm Jumeirah, Al Furjan, International City, Jumeirah Village, Jumeirah Park and Jumeirah Heights.
The company, which is behind some of Dubai’s most ambitious projects, including the Palm Jumeirah and Ibn Battuta Mall, amassed debts during the global financial downturn, forcing it to cancel major projects and eventually to be acquired by the Dubai Financial Support Fund during the Dubai World crisis. The legacy of the financial crisis means that the company is also facing the expiry of a Dh4.4bn sukuk, which is due to be paid in August this year to trade creditors and contractors left out of pocket when Nakheel delayed and cancelled projects.
Nakheel said that it would pay the debt from its own cash reserves.
“Our trade creditor sukuk is due to mature in August 2016 and Nakheel is well placed to honour this financial commitment from its own internal resources, which will successfully conclude the last of any restructuring-related matter,” said the Nakheel chairman Ali Rashid Lootah. “In conjunction with this major undertaking, we will continue to build on our improved performance in 2016 and implement our growth plans.”
He said the company was continuing with plans to grow its recurring revenues, which would leave the company less susceptible to market downturns.
This includes a first phase of expansion at its Dragon Mart shopping mall and the company’s first hotel, the ibis Styles at Dragon Mart.
Mr Lootah said: “Our strategy to have a more diversified business is taking shape. Our first hotel has opened, Dragon Mart 2 is now operational and we expect to complete and start operations at the first phase our Ibn Battuta Mall expansion in 2016.
“These projects will contribute to our recurring revenue, which is expected to grow in subsequent years as more projects are completed,” he said.
The news comes as the property data company ReidIn reported that house prices in Dubai fell by an average of 11 per cent last year as lower oil prices, the strong dollar and geopolitical unrest continued to affect the city’s real estate.
Earlier this week, Union Properties the Dubai developer behind Motor City and the Green Community, reported that 2015 profit fell by 49.7 per cent to Dh434.6m, as the company was hit hard by a slowdown in the emirate’s property market.
Meanwhile Nakheel’s sister company, Limitless, which is also chaired by Mr Lootah, said that “private discussions continue” regarding the Dubai-based company’s debt repayment.
In June, the company said it planned to repay Dh2.07bn, or 42 per cent of its outstanding debt, and had won the approval of 90 per cent of banks involved on a revised deal to restructure its debt by extending the remaining payments to 2018.
State-owned Limitless had agreed in 2012 to restructure its Dh4.45bn debt by this year.
lbarnard@thenational.ae
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