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Tue 27 Sep 2011 01:36 PM

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Dubai’s Nakheel says will post 2011 profit

Debt-hit developer unveils plan to build 103 beachfront townhouses on Palm Jumeirah

Dubai’s Nakheel says will post 2011 profit
Nakheel
Dubai’s Nakheel says will post 2011 profit
Nakheel banner
Dubai’s Nakheel says will post 2011 profit
The World, Nakheel
Dubai’s Nakheel says will post 2011 profit
Palm Jumeirah

State-backed
developer Nakheel will see its 2011 profit exceed the $234.1m posted last year
and expects to issue the final tranche of its $1.63bn Islamic bond by the
year-end, its chairman said.

The developer,
which split from parent firm Dubai World in August to become a government
entity, 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,” Ali Rashid Lootah
told reporters at Cityscape Global on Tuesday. “Leasing and retail, we’re doing
about 20 percent higher than planned. Sure [we’ll make a profit]. It will not
be less than 2010,” he said.

“Before
the end of the year [we’ll issue the remaining sukuk].”

The state-owned
firm does not plan to issue any further sukuks, but will go to the market for
future financing if required, he said.

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.

The developer said this month it wrote down AED78.6bn
($21.4bn) from the value of its real estate during the Dubai debt crisis.

Nakheel also unveiled plans to build 102 beachfront
townhouses on the Palm Jumeirah, where villa prices have begun showing signs of
recovery
, according to consultancy Jones Lang LaSalle.

“Oversupply
depends on which area and what type of product,” said Lootah. “We see stability
and we see an increase in certain products; rentals on villas, for example, are
increasing. On Palm Jumeirah and Palm Island the property prices are increasing
so this is a sign of recovery. Always the good products get moving first,” he
said.

The
developer said in August it also plans to build a community mall on the
offshore island.

Revenue
for 2011 has increased amid a 10-15 percent increase in the management and
leasing of fully-owned assets and a rise in residential unit occupancy, Lootah
said.

Dubai’s
property prices are expected to drop further as 54,000 homes will come onto the
market between 2011 to 2015, Jones Lang LaSalle estimates. That’s about 15
percent to 20 percent of the existing supply, according to the real-estate
broker.

Mark Renton 8 years ago

It would be interesting to find out how much of the profit comes from writebacks, i.e. as a result of reneging on debt and forcing vendors and lenders to take a large haircut on money that they are legitimately owed.

waseem 8 years ago

Something i can't understand about your projects: Int'l city & discovery gardens ... why the entrance & exit in both areas are stupid in terms of design and capacity?

SAM 8 years ago

But what about free cash flow! PanAm had ample profits but poor cash flow, and consequently it went bankrupt. Companies are valued based on their free cash flow and not on reported net income.

Red Snappa 8 years ago

Why would you keep building, when presumably that causes problems for other Palm dwellers who are looking to sell their villas and also pushes prices down again.

Can understand finishing off a variety of projects, where Nakheel already have buyers and therefore a lot of final payments at plump pre-downturn prices, but adding more inventory to an only slightly rising district is premature logic.

There have been many comments relating extraordinary property crashes elsewhere, for example Hong Kong and it took ten years for that market to return to upper-quartile selling prices. Not only that we have a second financial crisis brewing in the background, which will undoubtedly impact tourism and meetings, incentives, conferences and exhibitions business.

Telcoguy 8 years ago

Revenue is vanity, profit is sanity, cash is reality. Or so I have been told.

Red Snappa 8 years ago

Just as an aside, I wonder how much Nakheel will have to spend on rectifying the flooding problems at International City, bad image for affordable housing in the city. Presume that must impact the bottom line to some tune some time soon?