RAK Properties reports higher sales but increasing costs pinch profits

Developer is reconfiguring the Anantara Mina Arab hotel to reduce the number of rooms on offer

Flamingo Villas units developed by RAK Properties within the Mina Al Arab community. Courtesy RAK Properties

RAK Properties recorded a 46 per cent fall in half-year profits for 2019 despite achieving a slight uptick in sales on the back of rising costs.

The company reported a net profit of Dh15.8 million for the six-month period, compared to a Dh29m profit in the prior year period. Revenue increased 4 per cent to Dh78.5m, according to a company filing. Profit for the second quarter more than doubled, however, to Dh11.8m from Dh4.4m in the same quarter last year. Second-quarter sales were also 95 per cent higher year-on-year at Dh32.7m.

The company, which is the master developer of the Dh10 billion Mina Al Arab waterfront community on the Ras Al Khaimah coastline, witnessed a 47 per cent year-on-year increase in cost of sales for the six months to June 30 to Dh52.6m. Total assets also edged 2 per cent higher over the six-month period to Dh5.46bn.

In its update filed on the Abu Dhabi Securities Exchange, where its shares trade, the developer said that the Anantara Mina Arab Hotel, a 225-key property set to be operated by Minor Hotels Group that was initially scheduled to open last year, is being redesigned and the number number of keys reduced to 174. No new opening date was given for the property and the developer did not immediately respond to requests for comment from The National. No opening date was given for the 350-key Intercontinental Hotel and Resort, which was also expected to open last year.

RAK Properties’ said that it expects handovers to buyers of apartments at both the 144-unit Gateway Residence project at Mina Al Arab and the Julphar Residence tower at Reem Island in Abu Dhabi to begin during the final quarter of this year.

An Asteco report published earlier this month reported a 13 per cent year-on-year price decline for high-end apartments in Ras Al Khaimah, with a two-bed apartment in the luxury segment typically leasing for between Dh38,000 to Dh55,000 per year.

Asteco attributed a 7 per cent quarter-on-quarter decline in rents in the emirate to the handover of newer, better quality units at competitive rates.

“Further downward pressure on rates is expected as the delivery of new supply and resulting drop in rental rates in Dubai impedes the recovery of rates in the Northern Emirates in the short term,” Asteco’s report said.