RAK Properties' profit spikes as more new homes are sold

Real estate sales during first nine months double to Dh94m, developer says

RAK Properties reported a more than threefold increase in net profit for the first quarter. Courtesy RAK Properties.

RAK Properties reported a five-fold increase in net profit for the first nine months of 2019 as the company achieved much higher levels of sales.

Net profit climbed to Dh32.9 million in the nine months to September, up from just Dh6.1m in the same period last year. Revenue grew 70 per cent to Dh134.5m as property sales more than doubled to Dh94m, according to financial statements filed on the Abu Dhabi Securities Exchange, where its shares trade. Finance costs climbed 75 per cent to Dh4.9m, which the company indicated was due to the development of two hotels.

"In general, the creation of five-star holiday assets requires significant funding, and the funding for the two hotel properties is facilitated by renowned banks in the UAE," the company said in a statement accompanying its results.

The company is currently building two hotels — an 174-room Anantara and a 350-room Intercontinental property. Both will be based at its Dh10 billion Mina Al Arab master community on the Ras Al Khaimah coastline, but their delivery has been delayed. In its latest statement, the company said the "hotel properties are expected to start operation during 2021".

In terms of other projects, the company said that both its 266-apartment Julphar Residence project at Reem Island in Abu Dhabi and its 144-unit Gateway Residence project at Mina Al Arab are both "in the advanced stages of development" with expected delivery either in the final quarter of this year or the first quarter of next year.

The company also said it has a sales backlog of Dh122m of properties, revenue for which will be recognised in the next two-to-three years, depending on the construction timetable.

Rents and prices in the Northern Emirates are continuing to fall as potential occupiers take advantage of cheaper rents in Dubai, where more stock is available.

According to Cavendish Maxwell's third quarter UAE property market report, rents in more exclusive areas of Ras al Khaimah such as Mina Al Arab, Al Hamra Village and the Bateen Al Samar residential development range from Dh20,000 per year for a studio apartment to Dh60,000 for a three-bed unit.

“A prolonged softening in prices and rents has made real estate more accessible to, and affordable for, owner-occupiers and tenants," said Aditi Hariharan, an associate partner at Cavendish Maxwell.