By Sam Bridge
Dubai developer Damac cites low profitability as it announces it will withhold dividends at the end of this year
Dubai developer Damac Properties on Wednesday said it would not be distributing dividends to shareholders at the end of this year citing "low profitability and the weak market".
The developer made the announcement in a statement to Dubai Financial Market on Wednesday.
It added, however, that the decision for this year’s dividends may be changed "as we approach the time of distributing the dividends".
“The management will look at the circumstances at that time, and make a recommendation to the board of directors, and the latter will make a recommendation to shareholders,” Damac said in the statement.
The developer did not distribute dividends at the end of 2018 either.
Damac said in August its Q2 profit fell 87 percent amid declining revenue.
Profit dropped to AED50.6 million, down from AED378.2 in the same period last year.
The dividends announcement comes just days after Damac chairman Hussain Sajwani called for a temporary end to new construction in the emirate in a bid to address oversupply issues.
Around 30,000 new homes will be built this year in Dubai, twice the demand in the Gulf city, according to estimates by property broker JLL.
In an interview with Bloomberg, Sajwani said: “All we need is just to freeze the supply. Reduce it for a year, maybe 18 months, maybe two years.”
He said Damac has dramatically reduced new sales in the past two years and will focus on selling the properties in its inventory. Still, the developer will complete 4,000 homes this year and another 6,000 in 2020.