Nakheel reports flat quarterly profit

Above, construction activities progress at Nakheel Mall on Palm Jumeirah. Courtesy Nakheel

The Dubai developer Nakheel said on Wednesday its second quarter net profit was flat as the Dubai property market remained in the doldrums.

Net profit for the three months ending June 30 stood at Dh1.4 billion, the same figure for the same period a year earlier, according to figures published by government-owned Nakheel on Wednesday.

Profit in the first six months of the year stood at Dh2.95bn, 4 per cent higher than the Dh2.83bn the company made a year earlier.

Nakheel did not provide figures for its turnover during the period or any detailed breakdown of how its profit was achieved. As an unlisted developer, the company is not required to provide detailed accounts of its financial performance.

It said it had handed over 1,177 apartments and villas for sale to customers during the first six months of the year.

Nakheel said that it was developing about 12 million square feet of shops for lease and 19,000 homes for lease across the city in areas such as Palm Jumeirah, Deira Islands, Jumeirah Village and Warsan Village.

The company, which was at the heart of the 2009 Dubai World crisis, has long been under pressure to increase its recurring revenue portfolio to reduce its exposure to the Dubai property market cycles.

“Our encouraging half-year results reflect investor confidence in Dubai and its real estate sector,” said Nakheel’s chairman Ali Rashid Lootah.

“Over the next six months we will build on these positive figures with further improvements and better results as we continue with our strategy of creating more cash-generating assets and strengthening our asset base.”

House prices in Dubai have been falling for the past two years as the oil price plunge puts pressure on the local economy and the strength of the dirham, which is linked to the US dollar, makes it harder for housebuilders to sell to foreigners paying in weaker, non-dollar linked currencies.

Last week the property broker JLL said the United Kingdom’s vote to leave the European Union will delay the Dubai housing market’s recovery by six months.

JLL had previously forecast that the residential market in the emirate would start to recover either towards the middle of this year or later.

However, with Britons making up the third-largest group of foreign investors in Dubai property and the value of the pound down more than 10 per cent since the Brexit referendum last month, the broker has revised its forecast for next year.

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