Nakheel reports Dh767 million net profits

Increased delivery of properties, better cost and cash management have helped Dubai property developer Nakheel post a 36.5 per cent increase in its net profits to Dh767 million during the first half of the current year, compared to Dh562 million recorded in the corresponding period last year. Nakheel, which has one of the largest land banks in Dubai, said the increased handover of properties has helped the developer to record a 112 per cent jump in revenues to Dh3.1 billion during the first half of 2012, up from Dh1.46 billion recorded in the first half of 2011. Approximately 3,500 units have been delivered to customers since the beginning of the restructuring in several developments, mainly Palm Jumeirah, Jumeirah Village, International City, Al Furjan and Jumeirah Heights. However, the company’s net profit growth did not match the strong revenue growth of 112 per cent, despite better cost and cash management, due to its huge liabilities. Nakheel successfully concluded its restructuring in August 2011 with the issuance of a Sukuk of Dh3.8 billion to the eligible trade creditors and did a subsequent tap issuance of Dh227 million in April 2012 as part of its overall Sukuk program. Nakheel has made cash payments of Dh8.6 billion to its trade creditors since the commencement of the restructuring while interest and profit payments amounting to Dh500 million have been released to the lenders since the completion of the restructuring. “The consolidation of the existing customer liabilities has progressed well with Nakheel managing to amicably reduce longer term customer liabilities by Dh7.2 billion out of a total customer liabilities of Dh9.9 billion through various consolidation and swap schemes offered to its customers.” However, Nakheel’s results reflect a slow growth in the construction and real estate activities in the emirate. Elaine Jones, CEO at Asteco, said, “After three years of declining rates and limited sales activity, the real estate market is on the way to recovery, with established quality communities showing increases in values and higher transaction volumes.” Building projects worth over $65.5 billion are likely to be awarded to contractors this year across all building sectors, an increase of 13 per cent compared to last year’s $57.8 billion, according to new research by Ventures ME. “The robust financial performance of Nakheel are reflective of its focus on contributing to the recovery of the Dubai real estate market. Nakheel successfully recommenced all its near term projects and started delivering properties as scheduled during FY11,” Nakheel said. Most of the properties currently under construction are expected to be handed over to customers in the intervening period to Q1 2013. “Signs of improved investor confidence have flowed into the real estate sector, with continued demand for quality, well located, income producing assets,” said a latest report by Jones Lang LaSalle. “The overall residential market is seeing a positive trend with the villa market continuing to outperform the apartment sector in Q2 2012. Prime residential buildings in well-established locations continue to see improved performance, but secondary locations are still suffering from rental and pricing declines.”