Union Properties showcases the Dubai Autodrome and its surrounding community at the International Property Show in Dubai. Jeffrey E Biteng / The National
Union Properties showcases the Dubai Autodrome and its surrounding community at the International Property Show in Dubai. Jeffrey E Biteng / The National

Markets

Union Properties stock falls 4% despite big rise in profits

Profits at Union Properties rose to Dh179.7 million for the three months to the end of March 2014 from Dh21.9m a year earlier as the Motor City developer settled liabilities with contractors and sold off core assets.

Lucy Barnard

May 07, 2014

Union Properties stock fell almost 4 per cent yesterday despite an eightfold rise in profits in the first quarter.

Shares in the company closed down at Dh2.65.

Profits at Dubai’s second largest listed developer rose to Dh179.7 million for the three months to the end of March 2014 from Dh21.9m a year earlier as the Motor City developer settled liabilities with contractors and sold off high-value property assets.

The profits came on the back of an 11.6 per cent increase in revenues to Dh404m from Dh362.5m the year before, the company said in a filing to the Dubai bourse.

But revenue from Union Properties' core business – property management and sales – fell 37.2 per cent from Dh25m last year to just Dh15.7m.

The company, which has spent the past five years tackling a massive debt burden after it was hit hard by the Dubai property market crash in 2008 and 2009, said that it had saved Dh100m by settling historic liabilities with contractors after it suspended work on schemes following the global financial crisis.

The company also reported that it had made a Dh77.8m gain on a portfolio of investment properties which it sold during the period for Dh308.7m.

Asset sales at the company are nothing new. The company was forced to sell many of its prestigious assets, including the Ritz- Carlton hotel and substantial stakes in Limestone House and Index Tower to major shareholder Emirates NBD in the aftermath of the global financial downturn.

Union Properties is currently attempting to take advantage of a resurgence in Dubai property prices by returning to development.

Last autumn UP announced that it would be resuming construction work on six Dubai schemes worth Dh4 billion, including a development of 70 shops called The Ribbon and 40 stores at an expansion of its Uptown Mirdif retail district.

And last month the company revealed that it was in high-level talks to resurrect a bid to bring Formula One racing to its Dubai Autodrome track in Motor City in Dubai.

UP is also tying up with Dubai Investments to develop pockets of land around Dubai’s Expo site.

“Union Properties is not a blue chip name in the UAE like Emaar and so it tends to attract retail investors who often invest on a very short term basis,” said Sebastien Henin, the head of asset management at The National Investor.

“A lot of them are backing Union Properties as a way of investing in the Dubai real estate market and were perhaps disappointed and hoped for better quarter-on-quarter results.”

lbarnard@thenational.ae

Follow us on Twitter @Ind_Insights

if you go

The flights Fly Dubai, Air Arabia, Emirates, Etihad, and Royal Jordanian all offer direct, three-and-a-half-hour flights from the UAE to the Jordanian capital Amman. Alternatively, from June Fly Dubai will offer a new direct service from Dubai to Aqaba in the south of the country. See the airlines’ respective sites for varying prices or search on reliable price-comparison site Skyscanner.

The trip 

Jamie Lafferty was a guest of the Jordan Tourist Board. For more information on adventure tourism in Jordan see Visit Jordan. A number of new and established tour companies offer the chance to go caving, rock-climbing, canyoning, and mountaineering in Jordan. Prices vary depending on how many activities you want to do and how many days you plan to stay in the country. Among the leaders are Terhaal, who offer a two-day canyoning trip from Dh845 per person. If you really want to push your limits, contact the Stronger Team. For a more trek-focused trip, KE Adventure offers an eight-day trip from Dh5,300 per person.

The specs

Engine: 3-litre twin-turbo V6

Power: 400hp

Torque: 475Nm

Transmission: 9-speed automatic

Price: From Dh215,900

On sale: Now

COMPANY PROFILE
Name: Kumulus Water
 
Started: 2021
 
Founders: Iheb Triki and Mohamed Ali Abid
 
Based: Tunisia 
 
Sector: Water technology 
 
Number of staff: 22 
 
Investment raised: $4 million 
More from Neighbourhood Watch:

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.”

Know your Camel lingo

The bairaq is a competition for the best herd of 50 camels, named for the banner its winner takes home

Namoos - a word of congratulations reserved for falconry competitions, camel races and camel pageants. It best translates as 'the pride of victory' - and for competitors, it is priceless

Asayel camels - sleek, short-haired hound-like racers

Majahim - chocolate-brown camels that can grow to weigh two tonnes. They were only valued for milk until camel pageantry took off in the 1990s

Millions Street - the thoroughfare where camels are led and where white 4x4s throng throughout the festival