Damac acquires land in Dubai for Dh285 million

Company buys plots in Business Bay and Al Sufouh from related parties

Dubai skyline seen from Churchill Office Tower in Business Bay.

(Photo: Reem Mohammed/The National)

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Damac Properties acquired two plots in Dubai for a total price of Dh285 million as the company eyes expansion with new developments in the emirate.

The plots were bought in Al Sufouh and Business Bay areas from Dico Properties and Soor Food Stuff company, which Damac said were related entities.
"The acquisition comes in continuation of the company's approach to acquire prime plots in distinctive areas to expand its land bank for new innovative developments in future in order to increase its revenues for the benefit of its shareholdres," Damac said in a statement to the Dubai Financial Market, where its shares trade.

In the first half of the year, the developer delivered 1,476 units including the first handover in Akoya, the company's largest master development, with nearly 315 units in the Claret cluster completed and in the process of being handed over to customers.

The Dubai property developer also completed two other projects in the emirate  –Ghalia and Tower 108.

During the second quarter of the year, Damac reported a 87 per cent slide in net profit due to lower revenue and rising expenses as well as costs.

Net profit attributable to the owners of the company for the three-month period ending June 30 dropped to Dh50.6m, while revenue plunged 46 per cent at the end of the second quarter to Dh971m from the same period a year earlier. Expenses also rose to Dh238m.

Like many Dubai developers, Damac's shares have been hit by negative investor sentiment surrounding the emirate's property market due to fears of an oversupply. On Thursday, company's share closed at Dh0.91, which is 72 per cent lower than the Dh3.30 value at the start of last year.

Property consultancy JLL in its third quarter report for the year published on Wednesday, said more than 6,300 new homes were completed in Dubai during the three-month period, bringing the total fulfillments so far this year to 23,000. A further 33,000 units are scheduled to complete by the end of the year, but the company said "we remain cautious on the timely delivery" of these.

However, JLL said developers were reacting to market pressures by slowing new inventory. So far this year, projects containing just 7,800 new units have been launched, which is the lowest number for the past three years.