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
By Claire Ferris-Lay
Mon 05 Dec 2011 04:12 PM

Nakheel,
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.

The
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
2010.

“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
Dubai.”

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].”

Nakheel
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.

Dubai
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.

House
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.

But
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
prices.

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