Damac reports robust net profits for 2015

The Dubai based developer Damac booked upbeat revenues – Dh8.53 billion last year against 2014’s Dh3.74 billion -- and net profits – Dh4.51 billion (Dh3.48 billion in 2014), and stating that the Dubai realty market’s fundamentals are intact.

“The Government stays committed to all the infrastructure projects and tourism boosters; last year there was a 7.5 per cent growth in tourism numbers to 14.2 million,” said Ziad El Chaar, Managing Director at Damac Properties. “The Dubai Land Department has seen an 8 per cent increase in transactions.

“Those who doubt the Dubai story must learn to inspect all the positives of the city as a total market and then make their opinions. Adding up 1+1 and saying it’s 1.5 is not how they should work.”

According to Damac projections, there will be a further shortfall in new supply, which it expects to be under 10,000 units for a second straight year. This will eventually drive the “market back into positive pricing growth territory, perhaps towards the second half of the year or early 2017,” according to Hussain Sajwani, Chairman, in a statement.

“’The Dubai real estate market is at a consolidation point in the cycle and the rapid growth witnessed in 2012-14 is now behind us. However, this market creates opportunities for well capitalized and experienced companies like ourselves with a strong trackrecord.

“We strongly believe the current environment is very different than the one we faced in 2008. Dubai, in terms of government, regulator, developers, providers of capital, both debt and equity and investors have learned a great deal.

“Importantly, for the real estate market, a high single digit rental yield, amongst the healthiest in any major metropolitan centers globally, should continue to support investment demand.”

Damac has 62 million square feet as its developmental land bank, and El Chaar said there will continue to be replenishments on a need-to-do basis. On whether Damac has slowed down the rate of new launches since the fourth quarter, he said: “The new ones we have had are buildings and clusters at our existing master developments of Akoya and Akoya Oxygen.

“This may have given the impression that we are not doing anything new… but that’s not been the case. In the 40 days since the start of the year we had 45 roadshows internationally. Last year, we did so in 98 cities – international distribution is the key to the evolution of Dubai realty.”

Damac has also seen its costs go up, quite significantly at that. For 2015, it was Dh3.46 billion, against the Dh1.51 billion a year ago.

Dubai projects

Its projects in Dubai make up between 85-90 per cent of revenues, and El Chaar reckons that split is likely to continue even though the developer remains on the alert for openings in new overseas markets.

“Our focus will remain on areas where we currently have projects… apart from Dubai, that means Riyadh and Jeddah and in Doha,” said El Chaar.

As for its project in London, which was announced last summer, “The demolition of the existing structure will start by March/April and we start on the project immediately after,” said El Chaar.

In 2015, the developer booked sales of Dh9.06 billion, while the total area sold 8.12 million square feet. This is 3 per cent higher than in 2014. It also completed 2,600 units plus last year, in 2015.

Total assets grew 25 per cent to Dh23.45 billion, while gross debt was at Dh3.76 billion as of December 31, 2015. Cash and bank balances totalled Dh9.5 billion. It had a net cash position of Dh5.74 billion.

Source: Manoj Nair, Associate Editor, gulfnews.com


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