Damac reports sixth successive quarterly loss on lower revenue

Booked sales in the quarter rose 52% as transaction volumes picked up

A wave pool built at Damac Properties' Damac Hills development. The company booked Dh1.11bn of sales in the first quarter of 2021. Courtesy of Damac

Dubai-based developer Damac Properties reported a widening net loss in the first quarter of 2021 as its revenue almost halved.

The company reported a loss of Dh189.6m for the period, compared with a loss of Dh106.1m in the first quarter of last year. Revenue fell to Dh642.2m, from Dh1.23 billion in the same period last year, according to a statement filed to the Dubai Financial Market, where the company's shares trade.

"Losses were mainly due to lower revenue recognition as projects are nearing completion and the compressed gross margins were due to revenue-mix and higher selling and general administration expenses," the company said in a presentation document accompanying its first quarter results.

The quarterly loss was the sixth the company has reported in succession as it has adjusted to a market where prices had been falling for years amid a supply overhang. Across Dubai, there were more than 10,500 units delivered to owners during the first quarter of 2021 and a further 26,500 are set for handover throughout the rest of the year, according to a report published earlier this month by consultancy Core.

However, transaction data for the first four months of this year has been robust. Last week, consultancy Valustrat said residential capital values in Dubai rose 1.2 per cent month-on-month in April – the highest monthly increase for seven years. Prices still remained 6.5 per cent lower on an annual basis

Damac benefited from the increase in volumes, with booked sales jumping 52 per cent to Dh1.11bn during the quarter. Since 2002, the company has delivered 33,344 units as of March 31. It has a further 33,000 units in the pipeline, 96 per cent of which are in Dubai.

The recent rebound in residential sales volumes, which increased by 16.9 per cent month-on-month in April, has been spurred by a revival of the off-plan market, according to Valustrat.

Off-plan sales were up 30.1 per cent last month, while sales of ready homes increased by 8.7 per cent.

Damac's shares were trading at Dh1.23 at 11.26am UAE time on Sunday, down 3.1 per cent. Its shares are down 5.4 per cent so far this year and have fallen 72 per cent from their most recent peak in July 2017, although they have almost doubled in value over the past 12 months. The company's market capitalisation currently stands at just below Dh7.7bn.