Damac pulls off 98% gain in nine-month revenues

Dubai: The London Stock Exchange-listed Damac Real Estate Development Ltd recorded a near 100 per cent increase in revenues for the first nine months, to total $1.56 billion (Dh5.7 billion) compared with $792.5 million for the same period last year. The numbers were boosted by sales at the developer’s Akoya development in Dubailand, and to which it added a new phase — Akoya Oxygen — in August/September.

Operating profits were up 65 per cent to $688.1 million, up from last year’s $416.8 million. A key indicator — the cashflow generated from operations — weighed in with $741.2 million against $238.3 million last year, “driven mainly by higher booked sales resulting in increased cash collection as advances from customers and higher profit generated during the period”, according to a statement issued by the developer.

Gross margins were a robust 58 per cent for the 2014 and 58.9 per cent in the third quarter. Booked sales over three quarters were up 51 per cent to $2.4 billion from $1.59 billion last year.

On whether the recent softness in off-plan sales would prompt a reconsideration, Hussain Sajwani, Chairman of Damac Group told Gulf News, “I don’t agree with the premise. The sales cycle for our apartment and luxury serviced hotel apartment projects is running around three to four years from breaking ground to handover, depending, of course, on the size and scale of the project.

“The villas within our master-developments, Akoya and Akoya Oxygen are being delivered within 24 months. As today’s financial results signify, there remains a strong desire for high quality living experiences in Dubai... from people all over the world looking for a second home is one of the most attractive and well connected cities in the world.”

In the first nine months, it delivered 2,581 units, with 947 of these taking place during the third quarter. This places it on track to hand over 4,500 units for the full year.

Overseas market

On whether it would consider seeking a balance between project launches in Dubai and other markets — so as not to be exposed overwhelmingly in one — Sajwani said: “We are continuously looking for the right opportunity to take the Damac brand to an increasing number of overseas markets, but it is fair to say that Dubai is, and will remain, our home market.

“More than 90 per cent of our current portfolio is within Dubai. We have strong belief in the future growth prospects. Having said that, we handed over our first project overseas earlier this year, with the completion of Al Jawharah in Jeddah, Saudi Arabia. We have numerous other projects well under development, including in Qatar, Lebanon and Jordan.”

On whether the still existing low interest rate regime would convince him to tap more, Sajwani said: “It is always prudent for a business of our size and scale to be aware of opportunities in the capital markets. We have access to various funding sources and we are able to access these as and when required. The requirement of any debt is primarily to fund land bank acquisitions or for temporary working capital bridge financing. The level of business activity will determine the level of leverage to be carried on balance-sheet.”

The company issued an interim dividend — of $162 million — in August. Earlier this year, it had gone for a five-year $650 million sukuk which was used to fund a land purchase that was utilised for Akoya Oxygen.

Source: Manoj Nair, Associate Editor, gulfnews.comGN


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