Profit at Union Properties, the Dubai developer behind Motor City and the Green Community, halved last year as the company was hit hard by a slowdown in the emirate's property market.
Union Properties reported that net profit for the year sank to Dh434.6 million – down 49.7 per cent from Dh864.9m the previous year.
Revenues for the period fell 61 per cent to Dh1.46 billion from Dh2.07bn a year earlier, the company reported to the Dubai Financial Market yesterday.
“Net profit was approximately Dh435m, giving 12 fils as earnings per share for 2015,” said Ahmad Al Marri, general manager of Union Properties.
He added that total assets reduced by 2.4 per cent to Dh8.2bn at the end of 2015, while shareholders’ equity in the company increased by 6.6 per cent over the period to stand at Dh5.3bn.
The news concludes a disappointing year for Union Properties, which reported an 84 per cent fall in profit in the first quarter of the year, a second-quarter net profit fall of 96 per cent and third-quarter profit slide of 13.5 per cent, much of which it blamed on lower sales revenues and lower gain on property valuations.
The company did not provide a breakdown of fourth-quarter numbers.
“The fall in profits is not a surprise,” said Harshjit Oza, a property analyst at Naeem Brokerage.
“With oil prices low and a softness in the Dubai property market, we have been expecting some developers to report weak earnings and falls in profits. We expect this weakness to continue in 2016 as well.”
Union Properties was hit hard by the global financial crisis in 2008.
After 2010, to shore up its cash balance, the developer sold some of its key assets such as the Ritz-Carlton Hotel and substantial stakes in Limestone House and Index Tower to its key shareholder, Emirates NBD.
However, since then the company has begun construction on 226 properties at the third phase of its Green Community project in Dubai Investments Park, and has unveiled plans to establish a Saudi Arabian joint venture with Naif Al Rajhi Investment Company.
The company’s shares fell 1.4 per cent to Dh0.626 in Dubai yesterday.
lbarnard@thenational.ae
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