Dubai developer Nakheel doubles first-quarter profit to Dh1.35bn

Despite a well-documented slowdown in the Dubai housing market, Nakheel put the abrupt increase in profit down to 'a strong performance by the development business, with ongoing handovers of properties to customers'.

Nakheel’s first-quarter profit more than doubled to Dh1.35 billion, the company reported yesterday.

The developer, owned by the Dubai government, said that net profit for the first three months of the year rose more than 114 per cent from the Dh629 million reported during the same period the previous year.

Despite a slowdown in the Dubai housing market, Nakheel attributed the profit growth to "a strong performance by the development business, with ongoing handovers of properties to customers".

As a private developer, the company is not required to provide more detailed accounts on its financial performance.

This month Nakheel reported that it was planning to build more than 23 million square feet of housing, shopping and leisure facilities at its Ibn Battuta and Dragon Mart shopping centres and at its planned Deira Islands development.

Nakheel said it was aiming to boost its recurring revenues from shopping, housing and leisure leases to Dh7.5bn per year in the coming years as the company attempts to move away from the cyclical property market.

In 2010 the company’s recurring revenue stood at Dh500m.

The company, which was at the heart of the Dubai World crisis, was restructured and taken over by the Dubai government in 2011 after amassing total debt of Dh7.9bn.

Last year Nakheel reported that it had reduced its debts to Dh4.4bn from Dh12.3bn by repaying all Dh7.9bn of bank debt four years ahead of time. Nakheel’s trade creditor sukuk of Dh4.4bn is due to be paid in August 2016.

“With our significantly reduced level of debt, we are well positioned to pursue our strategy of creating more cash- generating assets and strengthening Nakheel’s asset base to further boost our business and financial results in the coming years,” said the Nakheel chairman Ali Rashid Lootah yesterday.

Last year the company said that it was evaluating a possible share sale once it had cleared its debt.

“Because of what happened in 2009, investors will look two or perhaps three times at Nakheel before investing,” said Sebastien Henin, head of asset management at The National Investor.

“I don’t say that it can’t happen, but Nakheel will have to provide a lot of details and provide a really clean proposition of what it intends to do.”

Follow The National's Business section on Twitter