RAK Properties reports 15% jump in second-quarter profit on higher revenue

Net profit for the three months ending June 30 was Dh14.6m while revenue more than doubled to Dh83m

RAK Properties' Mina Al Arab development in Ras Al Khaimah. Satish Kumar / The National

RAK Properties reported a 15 per cent jump in second-quarter net profit after its revenue more than doubled on the back of higher property sales.

Net profit for the three months through to June 30 rose to Dh14.6 million, the company said in a filing to the Abu Dhabi Securities Exchange, where its shares trade.

RAK Properties reported revenue of Dh83.8m after property sales increased to Dh71.6m, compared with Dh18.9m in the same period last year.

However, the company also incurred higher costs as activity increased. Finance costs increased to Dh10.3m in the second quarter, from Dh624,000 in the same period last year while selling, general and administrative expenses rose by 15 per cent to Dh9.3m.

The developer said it began to hand over apartments at the Gateway Residences project, part of its Dh10 billion Mina Al Arab development in Ras Al Khaimah, during the period.

Its Julphar Residence project on Reem Island in Abu Dhabi is at an advanced stage, with property deliveries expected to be completed by the end of the current quarter, the developer said on Sunday.

RAK Properties is also working on the Marbella Villas and Bay Residence projects in Ras Al Khaimah.

Marbella Villas, with 205 villas and townhouses, is scheduled to be completed next year while construction on the Bay Residence project is expected to begin in the fourth quarter of this year.

In the hospitality segment, the company is building a 350-room Intercontinental hotel and resort and a 174-room Anantara Mina Arab hotel and resort.

“The construction of hotel properties has been progressing as per [the] development plan, with a target to start the first hotel operation by the fourth quarter of 2021,” Mohammad Al Qadi, managing director of RAK Properties, said.

Profit for the first six months of this year rose by 65 per cent to Dh26.7m as revenue grew by 50 per cent to Dh120m, the company said.

Total assets at the end of June reached Dh5.67bn, up 2 per cent since the end of last year.

RAK Properties distributed a 4 per cent dividend to shareholders during the first quarter.

Property sale prices fell by 9 per cent year on year in the Northern Emirates in the second quarter, according to consultancy Asteco, while rents fell by 10 per cent.

The downward pressure on rental rates “is expected to continue with the steady delivery of new supply”, the consultancy's second-quarter report said.