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Mon 5 Dec 2011 04:12 PM

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Dubai’s Nakheel says back in the black in H1

State-owned developer reports AED526 net profit on handovers of stalled projects

Dubai’s Nakheel says back in the black in H1
Nakheel overstretched itself building projects such as the Palm Jumeirah island

the Dubai developer that wrote down AED78.6bn ($21.4bn) from the value
of its real estate as property prices in the emirate crashed, reported a
first-half net profit on Monday.

architect behind Dubai’s palm-shaped island said it booked profit of AED526m ($143m) in the six months to June, driven by
the handover of real estate project stalled in the downturn.

The company gave no comparative data for

“Revenues.....were mainly driven by the
handover of development properties in a number of Nakheel projects. Other
business segments including retail and leasing also contributed positively to
the results,” the company said in an emailed statement.

“The financial results of
Nakheel are also indicative of a relatively more stable real estate market in

Revenues stood at AED1.5bn, mainly driven by the handover of
development properties in a number of stalled Nakheel projects. Cost cuts also reduced overheads by
AED 131m compared to the same period in 2010, the company said.  

"The company has remobilised a number of its
construction sites where work is progressing as per its business plan," it
said in the statement.

Nakheel completed a $16bn debt restructuring earlier this
year and is now wholly-owned by the Dubai government, after being carved out
from parent company Dubai World.

Chairman Ali Rashid Lootah said in September he expected
Nakheel’s 2011 profit to exceed
the $234.1m posted last year. The developer said
profit would come from its leasing and retail business which is yielding 20
percent above expectations.

“We have
our collections from customers, from retail, from leasing,” he said. “Leasing
and retail, we’re doing about 20 percent higher than planned. Sure [we’ll make
a profit].”

was one of the biggest casualties of Dubai’s real estate crash, suspending at
least 100 projects in the wake of a property collapse that more than halved
house prices in the emirate.

Some of
its projects, including Nakheel’s Waterfront and Jebel Ali development, are yet
to complete.

saw less than 1,700 real estate deals in the first ten months of the year, data
from Dubai Land Department showed in November. Some 1,603 deals were signed off
in the ten months to October, down from 5,363 during the same period in 2008.

But the
figures reflect a 37 percent increase in property transactions when compared to
2009 at the height of the financial crisis, suggesting fledgling signs of
recovery that may be linked to the wave of Arab Spring unrest that has rocked
economies in the region.

prices showed signs of recovery in the third quarter, with slight rises in
prime projects such as Palm Jumeirah and Arabian Ranches, Jones Lang LaSalle
said in September.

analysts remain concerned that the estimated 33,000 new homes scheduled to hit
Dubai’s market by end-2012 could cause fresh declines in rental and sale

annon. 7 years ago

Dubai is supposedly growing by 100,000 residents a year. We are soon hitting the 2 Million residents mark. So why would 33,000 new units at the end of 2012 be of any concern?

Red Snappa 7 years ago

As I recall the 33,000 units specified by JLL will actually bring the total number of freehold properties up to 357,000, or is that all properties?

Bearing in mind that there were also a huge number of properties built purely for leasing in Dubai in tandem with the freehold explosion. Above all the percentage of the population with sufficient income to unequivocally afford to either buy or rent the type of properties being delivered, is a relatively small proportion.

Also I repeatedly ask where these population growth figures come from everytime they are mentioned and nobody seems to answer. The 5% population growth must have some basis, yet the percentage of those new people who fall into the slightly above middle-income category is never given.

Plus there are job losses and a supposed migration of current Dubai commuters to Abu Dhabi to the capital. The numbers don't seem to stack up, without some detail it is difficult to take them at face value.

Mike DeLonghi 7 years ago

Annon, where are you getting your figures from. It is a FACT that the Indian expat population is now shrinking. Please enlighten me as to where the 100000 new souls are coming from? And dont say Europe....also there we are talking an outflow rather than inflow.

So 33.000 new units on top of 30% vacany in commercial and something similar in residential (?) is a problem.

ALI 7 years ago

Nakheel numbers do not add up :(

Stephen 7 years ago

Well the population figures are everywhere if you care to look. Dubai Statistics Centre records the city population at 1.95m and various news sites have commented on what appears to be established population growth of 100k per annum since 2008.

Of course whether or not you believe it is a different matter. The roads certainly seem busier, the Metro handles enormous numbers and certainly some business sectors are booming. The paradox is the tiny number of housing transactions recorded this year and the obvious huge numbers of empty commercial and residential space

Telcoguy 7 years ago

You can always check the numbers using some proxies and do your estimate. I did using reported traffic figures between UAE and other countries and also some internal consumption .
The info is publicly available and fairly reliable. I would do that basic exercise before investing.

Red Snappa 7 years ago

OK thank you for the population data source. So according to Dubai Statistics Centre, at the end of 2010, the total population of Dubai was roughly 1.91 million. Of that population about 1.49 million were men.

The high ratio of males was attributed to the fact that a large proportion of them are not accompanied by their families. The minimum monthly salary required for an expat to bring his family into Dubai to stay with him is AED 10,000 per month. That would imply that a significant percentage are earning well under that figure, which means that the so called middle income tranche of society are not present in abundance. On average a buyer must earn at least AED 10 to 12k to even be considered for a mortgage.

Looking at the values given in for sale and to rent listings, doesn't that leave a huge potential buyer and tenant hole in the property market already, never mind building more. So yes it's a problem if 33k units arrive in 2012 along with 100k newbies on low income.

Ahmed 7 years ago

Sorry, I dont trust Nakheel.

Telcoguy 7 years ago

We crunched some numbers a few weeks ago for a customer, it can not be just the arrival of 100K lower end residents. To explain the numbers you need a strong substation of higher-spenders with lower ones., really, really strong.

Either that or the increase is not real and reflects the regularization of a number of previous residents who were not legal here. That I have seen before in other places, and really makes comparison hard. Your official numbers will reflect this increase, but you will see no effect on consumption.

What can I say? all this uncertainty is good for my business :)