Union Properties expects 'remarkable' Q3 profits

UPDATE 1: New general manager says firm open to merger proposals but no talks yet.
Union Properties expects 'remarkable' Q3 profits
By Tamara Walid
Mon 05 Oct 2009 12:20 PM

Dubai's Union Properties, the Gulf emirate's third-largest developer, expects to post a "remarkable" net profit in its third-quarter results, driven by delivery of new units, an executive said on Monday.

Speaking to Reuters on the sidelines of the Citiscape property exhibition in Dubai, new general manager Khalid al-Jarwan said the company would turn a profit this quarter after posting a loss in the second quarter.

"The profit in the third quarter should be good compared to Q3 last year and Q2 of 2009," Jarwan, who was appointed in June, told Reuters. "I am really confident that Q3 numbers will be remarkable for Union Properties."

Union Properties said in August the valuation of its investment properties fell into the red, dragging the developer to a second-quarter loss as the sector struggles in the global economic downturn.

The developer made a loss of AED227.95m ($62.1m) compared with a profit of AED317.7m in the same period in 2008.

Dubai's once-booming property sector is suffering a sharp slowdown as prices fall, developers cancel or slow projects and jobs are slashed.

Jarwan said Q3 profits would be driven by new units in the process of being handed over to customers, such as MotorCity where it is building a Formula One theme park.

"Sixty to 70 percent of units have been handed over in MotorCity to investors," he said. "Construction work for the foundations is 60 to 70 percent completed. It's a just a year to open now we'll start by mid-2011."

In February, Union had said it was suspending construction of the $460m theme park, part of the multi-billion dollar MotorCity project in Dubai.

Union posted a second-quarter loss of $62m.

Jarwan reiterated that Union is open to a merger with Dubai developer Deyaar but was not in talks. Speculation of a merger began last year, which both firms denied.

"We are open to a merger if it will bring value addition," he said. "We are open to a merger with any group or company that we feel is as strong as Union Properties."

Union Properties shares closed almost 4 percent up in Dubai, outperforming the market which closed 2 percent higher. (Reuters)

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