News Column

Damac's Q1 profit up 79%?on Dubai's realty rebound

May 14, 2014

Booked sales more than double as developer basks in boom

Leading Dubai developer Damac Real Estate has seen its first-quarter profit surge 79 per cent in a year, with business buoyed by the rebound in the city's residential sector, the company said on Tuesday.

Its figures showed net profits increasing from $117 million in the first quarter of 2013 to $210 million this year.

"The continued economic recovery in our core market (of Dubai) has supported strong sales," said Damac executive chairman and chief executive Hussain Sajwani in a statement.

Speaking to Khaleej Times, Sajwani said strong sales in the first quarter of 2014 had contributed to another good performance from Damac and a highly profitable start to the year, as well as a substantial growth in net assets.

"We are pleased with the first quarter results, which reflect the continued resurgence in the Dubai real estate market," he said.

"We continue to see solid levels of demand in the luxury market, which is reflected in the growth in rental levels and residential values. We continue to look for suitable new land parcels ensuring we can provide supply to meet demand."

Dubai is forecast to see continued economic growth as stated by the International Monetary Fund anticipating that the economic growth in the UAE is expected to remain strong at 4.5 per cent in 2014.

"This growth will sustain demand for further residential property, both from owner occupiers and in the rental market, as well as for hotel and leisure space," said Sajwani.

"We have responded to this by reweighting our development portfolio to include a greater proportion of hotel and serviced hotel apartment projects, which now represent 40 per cent of our total pipeline," he said.

Sajwani said after successfully closing a $650 million Sukuk his company is well capitalised to increase its land bank, allowing it to capitalise on the strength of the Dubai market. "The outlook in our markets remains positive, and we are well on track to deliver strong results to our shareholders.

"The new launches which we have brought to market post-Q1, including the serviced apartments brand Naia by Damac and the first officially-certified Shariah-compliant project in Dubai Constella will drive our business forward through 2014," Sajwani told?Khaleej Times.

The leading developer of high-end and luxury residential property in the Middle East said revenue grew by 94 per cent from $225 million in the first quarter of 2013 to $436 million in the same 2014 period. Revenue primarily comprised income attributed to the completion and handover of Cosmopolitan and Water's Edge, as well as from the land portion of villa sales in Akoya of $173 million.

The developer said booked sales more than doubled year-on-year to $864 million in the first quarter, as gross profit increased by 89 per cent to $268 million (compared to $142 million in the same 2013 period). Gross margin remained strong at 61.4 per cent.

In the first quarter, 577 units were completed and delivered, with estimated total deliveries for 2014 of between 4,000 and 5,000 units, Damac said.

Operating profit increased by 76 per cent to $205 million, reflecting the growth in general.

Damac's development portfolio stood at $1.916 billion, as at March 31, 2014, having reduced marginally from December 31, 2013 due to the handover of units during 2014 first quarter.

During the first quarter, total assets stood at $3.526 billion, representing a growth of 16 per cent compared to 2013's final quarter, primarily led by an increase in cash and bank balances. The company also reported 32 per cent rise in total shareholder equity, which increased to $869 million.

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Source: Khaleej Times (United Arab Emirates)

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