And developer insists Q4 profit drop was due to ‘change in accounting standards’
Between 5 and 7 percent of Damac Properties’ total sales in January were to the Chinese following an aggressive marketing push into the country last year, according to the company’s managing director, Ziad El Chaar.
Damac signed deals with two Chinese property brokers last year in a bid to target investors from the Far East. The agencies were 5i5J, covering northern Chinese cities including Beijing and Shanghai, and QFang, covering the south.
It said at the time that 5i5J alone had 30,000 sales people selling one unit every four minutes.
El Chaar told Arabian Business on Thursday that the Dubai-based developer wants to tap into fast growing demand from China for Middle East real estate, prompted by substantial growth in Chinese tourists to the UAE in particular.
Dubai’s Corporation for Tourism and Commerce Marketing (DCTCM) last summer reported 241,000 visitors from China in the first six months of 2015 – a 25 percent increase from the same period last year.
Later in the year, the Chinese ambassador to the UAE predicted that the number of Chinese tourists to the UAE as a whole is projected to increase further, to 550,000 by the end of 2015.
El Chaar said between the two tie-ups, Damac has six major Chinese cities covered in terms of marketing. “We have completed the training of 7,000 sales people with these two brokers and the results have started trickling down that market.
“I can tell you, for example, that in January , close to 5-7 percent of our sales were from China and we definitely expect this to grow in line with anticipated growth in tourism.”
He declined to reveal total sales figures ahead of announcements to the stock exchange, but added: “We definitely expect a lot from the Chinese market and hope that more and more developers from Dubai will assist us in promoting Dubai in China, because today we are alone.”
El Chaar said sales across Damac schemes were strong but declined to disclose figures. He said 50 percent of the under construction Aykon Nine Elms tower in London had been sold since marketing commenced last July.
He confirmed reports that Damac was eyeing additional opportunities in the UK capital, but would not be drawn on any forthcoming deals. “Definitely a company of our size is always on the lookout for new projects that will benefit our shareholders,” he said.
El Chaar was speaking as Damac announced its 2015 annual results on Thursday. The developer reported a full-year net profit of AED4.51 billion ($1.23 billion), up from AED3.48 billion ($948m) in 2014, and a healthy net cash position of AED 5.74 billion ($1.56 billion) and gross debt to equity ratio of 0.38 as at 31 December 31.
However, it also reported a 12 percent fall in fourth-quarter net profit, according to Reuters calculations, to AED844 million ($229.8 million).
But El Chaar insisted this was due to a change in accounting standards from 2014 to 2015, during which time IFRS reporting standards were adopted. “Under the old standards you were recognising revenue and profit based on 100 percent completed units, not on construction progress. This is where the confusion has come from,” he said.