The Dubai developer Damac Properties reported a 33 per cent decline in year-on-year sales for the first quarter as buyers adopted a watch-and-see approach.
Revenue fell to Dh1.62 billion compared with Dh2.4bn a year earlier. Net profit also dropped by 15 per cent to Dh1.05bn. The developer booked Dh2bn worth of off-plan sales during the quarter – a drop of 28 per cent on the same period last year.
Damac said booked sales were flat quarter-on-quarter and were 5 per cent higher than at their recent low point in the third quarter of last year.
During the period, it handed over 306 units at the Damac Maison Royale The Distinction project in Business Bay. The developer expects to hand over between 2,700 and 3,000 new units by the end of this year. Damac said that it had broadened its product range during the quarter through the launch of the six-tower, four million square foot Aykon City development fronting Sheikh Zayed Road.
“The levels of interest, activity, transaction values and volumes are solid. We remain very positive on the future of the real estate sector in Dubai and expect very healthy progress as further infrastructure investment leads developments through 2020,” said Hussain Sajwani, the company’s chairman.
Arqaam Capital said the revenue figure posted was 15 per cent lower than its expectations and that the off-plan sales figure had been near to the lowest Damac had recorded for 12 quarters.
In a research note, analyst Mohammad Kamal said: “Off-plan sales have begun to trend in line with the broader market’s weak appetite for home ownership, as we continue to believe that foreign marginal buyers are absent and resident buyers remain on the sidelines until primary and secondary residential market prices stabilise.”
It also said land sales fell by 74 per cent to Dh292m, which was partly because more of its new sales are in high-rise schemes.
“We remain wary on sales momentum in Akoya Oxygen as more than 40 per cent of land remains unsold,” said Mr Kamal.
Despite this, Arqaam Capital maintained its buy recommendation, stating that gross profit margins of 61 per cent were the highest in its industry. It has a target price of Dh3.20 on Damac’s shares, which closed 4 per cent lower yesterday at Dh2.37.
Hazem Abdallah, Damac Properties’ vice president of investor relations, said land sales fell as it focused heavily on the launch of Aykon City in the quarter, where it sold Dh500m worth of apartments within six weeks of its launch. That led to less of an emphasis on sales at Akoya and Akoya Oxygen, but there were “a slew of secondary launches” planned for both later this year.
Mr Abdallah also said market sentiment this year would be broadly similar to last year. “There is definitely interest in Dubai … we are confident that we will end the year better than we started it,” he said. “And at Damac, we create demand. We’ve done 115 roadshows in 23 cities in Q1. We’re not people who sit and wait for people to go past the agency window.”
mfahy@thenational.ae
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