By Andy Sambidge
Real estate developer says move aims to protect company during global downturn.
A real estate developer said on Thursday it had been forced to slow its expansion plans and would not be starting any new projects in a bid to protect the company during the global crisis.
First Dubai Real Estate Development Co, which is 66 percent owned by Al Mazaya Holding and has projects in the UAE and Kuwait, added that the economic downturn had left debtors unable to "pay their dues" to the company.
Chairman Seraj Al Baker was commenting after announcing that First Dubai had recorded profits of KD619,831 ($2.1m) in 2008, compared to a loss of KD111 in 2007.
Total assets amounted to KD135m in 2008 compared to KD67m in 2007, Al Baker added.
He said that while First Dubai's performance had been "superb" during the first nine months of 2008, precautionary measures had to be taken during the fourth quarter to protect the company's assets and project values as the global crisis hit the region.
"The global financial crisis has deeply affected the market, and has rendered debtors unable to pay their dues to First Dubai. This has made us adopt a series of precautionary measures regarding the company's assets, which affected 2008 returns," he added.
He said these policies included the slowing down of expansion plans and a decision not to undertake new projects during the current period.
Al Baker said that First Dubai was currently developing five residential districts in Queue Point in Al Liwan, as well as another 20 villas in The Villa residential project.
First Dubai is also developing Morina Residence, a project at Al Reem Island at the entrance of Abu Dhabi, at a cost of AED418 million.
Al Baker added: "The current decline in prices in the property sector has made First Dubai take some precautionary measures that will render the company and its projects safe from current and future market fluctuations."
Full marks to First Dubai for candour. Finally a Dubai real estate developer is starting to speak openly about the incredible challenges facing the industry, and showing that it is responding responsibly to protect the company's assets. There are no hollow claims about the market turning, or false calculations about how far (or little) the values have fallen from their crest. This kind of business transparency should be the standard for all who ply the troubled waters of Dubai real estate.
Well Done. One hopes that this is the first day on the road to recovery for Dubai
The first property company and man in the helm, who has acknowledged that there is a problem and it needs to be dealt with seriously. I am happy to hear from First Dubai that they have, are and will be taking steps to address the issue in hand and the step will not be to bury ones head in the sand and say there is no problem. Good show Mr. Baker.