Dubai’s Nakheel reports 22 per cent rise in profit for third quarter

Net income was up year-on-year, but down from the second quarter of this year.

Nakheel’s Discovery Gardens apartments. The company says its profit growth this year is a sign of a stable local property market. Pawan Singh / The National

Dubai government-owned property developer Nakheel on Wednesday said "stable market conditions" helped the company record a 22 per cent profit increase in the third quarter.

Net income for the three months to the end of September hit Dh955 million, compared with Dh781m a year earlier – something Nakheel attributed to growth in its development, retail, leasing and leisure businesses.

However, profit was down 31.7 per cent from Dh1.4 billion in the second quarter of this year.

Nakheel did not provide revenue figures for the third quarter or a detailed breakdown of costs and how its profit was achieved.

The developer said that it has more than 2,300 homes at various development projects under construction, declining to give details about how many units had been handed over during the third quarter.

The company, which was at the heart of the 2009 Dubai World crisis, said it was investing about Dh40bn in expanding its retail, hospitality and residential leasing portfolios.

Since the global financial crisis nearly sank the company, Nakheel has been under pressure to increase its recurring revenue portfolio to reduce its exposure to the Dubai property market cycles.

Nakheel said it was developing about 13 million square feet of shops across Dubai as well as 16 hotels and serviced apartments with more than 5,200 rooms. The company is also hoping to double its residential leasing stock by adding over 18,000 new homes to its portfolio.

As an unlisted company, Nakheel is not required to provide detailed accounts of its financial performance.

Nakheel said it had made net profits of Dh3.91bn for the first nine months of 2016 – an increase of 8.3 per cent on the previous year.

“The growth in our net profit for the first nine months of 2016 compared to the same period in 2015 is a sign of a stable and mature local real estate market,” said Nakheel’s chairman, Ali Rashid Lootah.

“The results also reflect positively on our business strategy to invest in our income-generating asset portfolio. We expect to further consolidate on our position and finish the year on an even stronger note.”

A fall in global oil prices and the strong US dollar are putting most real estate assets in Dubai under pressure.

Dubai has been suffering from a slump in house prices over the past two years, which has come at the same time a glut of new stock has come to the market.

According to property broker JLL, 5,400 new homes were completed in the city during the third quarter of the year – the highest quarterly completion since the end of 2012.

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