Damac paid out higher costs on finance, too. It has roughly Dh5.32bn ($1.45bn) of debt on its balance sheet during the second quarter of 2018. Antonie Robertson/The National
Damac paid out higher costs on finance, too. It has roughly Dh5.32bn ($1.45bn) of debt on its balance sheet during the second quarter of 2018. Antonie Robertson/The National

Damac first quarter profit plummets 45% amid rising sales cost



Damac Properties said first quarter net profit plunged 45 per cent as the cost of sales mounted for the Dubai-based real estate developer.

Net income in the first three months of the year fell to Dh483.9 million from the year-earlier period, the company said in a regulatory filing with the Dubai Financial Market, where its shares are traded. The earnings came in below the average Dh650m estimate of analysts polled by Bloomberg. Damac shares closed 0.43 per cent higher to Dh2.31 in broadly positive trade in Dubai with DFM General Index climbing 1.1 per cent.

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The cost of sales during the quarter rose to Dh1.13 billion from Dh887.3m reported at the end of the same period last year. The company reported revenue of Dh1.89bn below analyst estimates of Dh1.92bn.

The Dubai-based investment bank Arqaam Capital said that Damac’s 27 per cent drop in off-plan sales in the first three months of year to Dh1.6bn was broadly in line with market trends. The company, Arqam said, is likely to fall short of the full-year 2018 sales target of Dh7bn as the combination of Ramadan and summer months is likely to soften sales in the second and third quarters.

“We believe that 2018 will be a challenging year for pure home builders in the UAE as home ownership weakens across the primary market,” Arqaam said in a note to clients after Damac released its earning.

Damac in February reported a 25 per cent drop in its full year net income to Dh2.76bn. The Egyptian investment bank EFG-Hermes at that time noted that the operational and financial challenges are expected to put pressure on Damac this year. Cash flow issues at the company are likely to push the dividends lower and the company may have to raise debt to meet Dh2.2bn in repayment obligations over the next 24 months, the investment bank said.

However, despite the weaker-than-expected profit and revenues amid sluggish sales in Dubai, the company’s chairman said he was upbeat about longer term prospects of the real estate market of the emirate which has faced headwinds in recent years on the back of softer economic growth.

“Dubai’s property market continues to attract investors from around the world, thanks to .... the emirates’ global appeal as one of the safest, happiest and fastest growing cities in the world,” Hussain Sajwani said.

“Dubai continues to expand on its proposition as a leading destination for tourism, business and investment, with ongoing infrastructure development leading up to Dubai Expo 2020. Dubai remains one of the world’s most attractive places to live and work, which ultimately delivers long-term benefit to the real estate sector as a whole,” he noted.

German intelligence warnings
  • 2002: "Hezbollah supporters feared becoming a target of security services because of the effects of [9/11] ... discussions on Hezbollah policy moved from mosques into smaller circles in private homes." Supporters in Germany: 800
  • 2013: "Financial and logistical support from Germany for Hezbollah in Lebanon supports the armed struggle against Israel ... Hezbollah supporters in Germany hold back from actions that would gain publicity." Supporters in Germany: 950
  • 2023: "It must be reckoned with that Hezbollah will continue to plan terrorist actions outside the Middle East against Israel or Israeli interests." Supporters in Germany: 1,250 

Source: Federal Office for the Protection of the Constitution

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Round 1: January 17-19, Yas Marina Circuit – Abu Dhabi
 
Round 2: January 22-23, Yas Marina Circuit – Abu Dhabi
 
Round 3: February 7-9, Dubai Autodrome – Dubai
 
Round 4: February 14-16, Yas Marina Circuit – Abu Dhabi
 
Round 5: February 25-27, Jeddah Corniche Circuit – Saudi Arabia
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3.30pm: Handicap (PA) Dh40,000 1,200m; Winner: Gold Silver, Sam Hitchcott, Ibrahim Aseel.

4pm: Maiden (PA) Dh40,000 1,000m; Winner: Atrash, Richard Mullen, Ana Mendez.

4.30pm: Gulf Cup Prestige (PA) Dh150,000 1,700m; Winner: AF Momtaz, Saif Al Balushi, Musabah Al Muhairi.

5pm: Handicap (TB) Dh40,000 1,200m; Winner: Al Mushtashar, Richard Mullen, Satish Seemar.

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Romarinho, Brazil

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Other workplace saving schemes
  • The UAE government announced a retirement savings plan for private and free zone sector employees in 2023.
  • Dubai’s savings retirement scheme for foreign employees working in the emirate’s government and public sector came into effect in 2022.
  • National Bonds unveiled a Golden Pension Scheme in 2022 to help private-sector foreign employees with their financial planning.
  • In April 2021, Hayah Insurance unveiled a workplace savings plan to help UAE employees save for their retirement.
  • Lunate, an Abu Dhabi-based investment manager, has launched a fund that will allow UAE private companies to offer employees investment returns on end-of-service benefits.

Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.

Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.

Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.

Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.

“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.

Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.

From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.

Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.

BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.

Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.

Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.

“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.

Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.

“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.

“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”

The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”

Titanium Escrow profile

Started: December 2016
Founder: Ibrahim Kamalmaz
Based: UAE
Sector: Finance / legal
Size: 3 employees, pre-revenue  
Stage: Early stage
Investors: Founder's friends and Family

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COMPANY PROFILE
Name: Airev
Started: September 2023
Founder: Muhammad Khalid
Based: Abu Dhabi
Sector: Generative AI
Initial investment: Undisclosed
Investment stage: Series A
Investors: Core42
Current number of staff: 47