Dubai developer Damac expects the emirate’s property sector to steady in 2015 before supply shortages boost prices in 2016-17, its chief executive said on Monday, after the company reported an 11 percent rise in fourth-quarter profit.
Dubai house prices fell 49 percent from a peak in the third quarter of 2008 to the market bottom in the second quarter of 2009, according to consultants Cluttons, following a supply glut and the emirate’s debt crisis.
Prices subsequently recovered as an influx of cash and people from troubled parts of the Middle East helped spark a rebound, although Cluttons estimates house prices remain about 18 percent below 2008 peaks.
Damac made a profit of $249.8 million in the three months to December 31, according to Reuters calculations based on a company statement. This was up from $225.1 million a year earlier.
Damac’s 2014 full-year profit was $937 million, up from $641.5 million, the company said in a filing to London’s bourse.
“I see Dubai’s property marketing stabilising in 2015, but 2016-17 there could be some shortage in supply,” Damac chief executive Hussain Sajwani told Reuters.
“After consolidating, we see the market nosing up.”
The consensus view is for prices to fall slightly in 2015 as increased property sales taxes, stricter mortgage rules and a lack of affordability reverses market momentum.
Sajwani said four developers now controlled 90 percent of Dubai’s property sector – Damac, plus government-linked trio Dubai Properties, Emaar Properties and Nakheel.
“These are all long-established companies with strong cash flows and that is helping the market mature,” said Sajwani.
Damac’s fourth-quarter revenue was $440.4 million versus $431.8 million a year earlier, Reuters calculations showed.
The firm booked sales worth $3.1 billion in 2014, up from $2.5 billion in 2013. It delivered 3,553 units last year.
“If you look at our balance sheet, cash flows and growth requirements, I don’t see a huge need for additional capital,” said Adil Taki, DAMAC chief financial officer.
Damac’s value of properties under construction rose by 20 percent to $2.33 billion at 2014-end, largely due to increases in its land bank.
“I don’t expect we will buy a huge amount of land this year, although there will also always be some depending on location and availability,” added Sajwani.
Damac will also de-list its global depository receipts (GDRs) from London by mid-March, having bought out 97.4 percent of holders.
Shares in Damac, which joined Dubai’s main bourse in January, ended 6.8 percent higher.
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