Dubai's Damac Properties Q4 net profit falls 12%

Dubai's Damac Properties reported a 12 percent fall in fourth-quarter net profit on Thursday.

The developer reported a net profit of 844 million dirhams ($229.8 million) for the three months to Dec 31, Reuters calculated in the absence of a quarterly breakdown. This was up from 959.3 million dirhams a year earlier.

Damac's 2015 full-year profit was 4.51 billion dirhams ($1.23bn), up from 3.48 billion dirhams ($948m) in 2014, the company said in a statement.

Damac continues to maintain a healthy net cash position of AED 5.74 billion ($1.56 billion) and gross debt to equity ratio stands at 0.38 as at 31 December 2015, it added.

The developer completed over 2,600 units in 2015, including units in Akoya by Damac, the first master plan development around a golf course in Dubai. Damac also completed its first project in Qatar during the year with 512 units in Doha.

"The Dubai real estate market is at a consolidation point in the cycle and the rapid growth witnessed in 2012-2014 is now behind us," Hussain Sajwani, chairman of Damac said.

"However, this market creates opportunities for well capitalised and experienced companies like ourselves with a strong track record," he added.

Sajwani said 2015 ended with supply not exceeding 8,000 units for the Dubai market, a significant reduction on the initial 25,000 units supply that had been speculated.

"We strongly believe that the current environment is very different than the one we faced in 2008. Dubai, in terms of government, regulator, developers, providers of capital, both debt and equity and investors have learned a great deal. The underlying fundamental drivers that make Dubai an attractive destination have not changed," he said.

"Importantly for the real estate market, a high single digit rental yield, amongst the healthiest in any major metropolitan centres globally, should continue to support investment demand. Ultimately, developers who have the capabilities to target healthy pockets of demand, and who can offer a portfolio of products to satisfy said demand would fare better."

Sajwani said he expects the property market in Dubai in 2016 to "demonstrate its resilience against the background of the challenging economic environment".

"We see the structural shortage of supply as the cornerstone of the market resilience. We expect the total supply in Dubai to again fall short of 10,000 new units in 2016 eventually driving the market back into positive pricing growth territory, perhaps towards the 2 half of the year or early 2017. At Damac we remain focused on leveraging our competitive edge and believe we have at our disposal a set of levers that will allow us to continue to post solid results in the year to come," Sajwani said.

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