Handovers lift Nakheel first-quarter profit

Nakheel handed over 536 completed homes across its projects including Jumeirah Park. Jeffrey E Biteng / The National

First-quarter profit at Nakheel increased by an annualised 8 per cent as it opened new shops and hotels and handed over homes.

The Dubai government-owned property developer said net profit came in at Dh1.47 billion for the three months to the end of last month from Dh1.35bn a year earlier.

Nakheel did not provide figures for its turnover during the period or any detailed breakdown of how its profit was achieved.

As an unlisted developer, the company is not required to provide more detailed accounts on its financial performance.

Despite a slowdown in the Dubai housing market, Nakheel reported that it had handed over 536 completed homes across projects in Palm Jumeirah, Al Furjan, International City, Jumeirah Village, Jumeirah Park and Jumeirah Heights during the first quarter of the year – well over half the total 847 it handed over during the whole of last year.

The company said that footfall at its newly expanded 2.2 million square feet Dragon Mart mall complex had risen to 120,000 visitors a day at “peak times” – up from 80,000 a day a year earlier.

Nakheel opened its 1.4 million sq ft Dragon Mart 2 mall extension in November, nearly doubling the size of the wholesale Chinese-themed shopping centre on the outskirts of Dubai.

The company also reported that average occupancy rates at its first hotel, a 251-room property attached to Dragon Mart 2 managed by Accor, had hovered around 60 per cent during its first two months of operation.

Hotels in Dubai reported a 3.5 per cent decrease in occupancy to 82.5 per cent year-on-year in February, according to the research company STR Global.

The company, which is behind some of Dubai’s most ambitious projects, including the Palm Jumeirah and Ibn Battuta Mall, amassed debts during the global financial downturn, forcing it to cancel major projects and eventually to be acquired by the Dubai Financial Support Fund during the Dubai World crisis.

Since then Nakheel has repaid much of the debt and put together a new strategy aimed at developing more income-producing shops and hotels to reduce the company’s reliance on Dubai’s volatile residential property market.

The developer expects to officially open a 300,000 sq ft extension to its Ibn Battuta mall before the summer and it plans to build another nine hotels in Dubai.

“Our strategy to create more cash-generating assets and strengthen Nakheel’s asset base to further boost our business and financial results in the coming years is beginning to yield results,” said Ali Rashid Lootah, the Nakheel chairman.

Earlier this week the Dubai developer Emaar said it had embarked on a cost-cutting drive to meet more challenging market conditions this year.

However, after almost two years of falling residential sales volumes and softening house prices, the property broker JLL reported this week that property prices were close to bottoming out.

JLL reported a 10 per cent year-on-year decline in house prices in the first quarter, which it blamed on the strong US dollar (to which the dirham is pegged) and lower oil prices. The commodity’s fall has weakened the purchasing power of buyers from across the region.

But it said there were signs that price declines were slowing, and that it expects values to increase later this year.

Follow The National's Business section on Twitter