Profit at Damac fell by more than a third in the second quarter of 2016 as the Dubai developer blamed a slow Ramadan for a fall in property sales.
The glitzy developer, known for offering buyers luxury cars and boats as inducements to purchase flats, said that profit for the three months to the end of June 2016 fell to Dh886 million, down 37 per cent compared with the Dh1.4 billion it made during the same period a year earlier.
Revenues for the third quarter fell by a quarter to Dh1.7bn from Dh2.3bn during the same period a year earlier as the company delivered 494 completed homes in the first half of the year in Dubai and Beirut.
Dubai-listed Damac said that it booked property sales worth Dh3.63bn during the period – “marginally below the previous three quarters run rate, due primarily to the full impact of Ramadan in this quarter”.
Profit for the first six months of 2016 was down 36 per cent to Dh1.9bn from the Dh2.6bn the company made a year earlier, while revenue for the half-year was down 42 per cent to Dh3.3bn from Dh4.7bn.
House prices in Dubai have been falling for the past two years as the emirate’s economy has been hit by the falling price of oil and a strong dirham, making it more expensive for some overseas buyers to purchase property.
Last month property broker JLL revised its forecast for a recovery in the Dubai market back by six months to the start of 2017 owing to an anticipated negative impact on the market by Britain’s decision to leave the European Union. Nonetheless, Damac said that it expected to achieve full-year sales of more than Dh7bn as it plans to deliver 2,700 to 3,000 new homes.
“With the first half of 2016 behind us, we are more optimistic today about the business and expect to end 2016 in a more positive position,” said the Damac chairman Hussain Sajwani.
Damac’s second-quarter contrasts with the performance of Dubai’s largest listed developer Emaar Properties which, despite Ramadan taking place during the period reported second-quarter net profit of Dh1.2bn, an 8 per cent increase on a year earlier, while sales of Dubai properties for the half-year were 45 per cent higher than in 2015 at Dh8.85bn.
Damac shares closed down 0.42 per cent at Dh2.38.
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