Property handovers and retail expansion drive Nakheel to record figures

Property handovers in areas such as the Palm Jumeirah helped Nakheel raise its profit last quarter. Satish Kumar / The National

Nakheel, the company that built Palm Jumeirah, yesterday said net profit last year increased by 13 per cent on higher property handovers and retail expansion despite a softening market in Dubai.

The government-owned developer said that net profit last year grew to Dh4.96 billion – the highest the company had ever recorded – up from Dh4.38bn a year earlier, the company said in a statement.

Net profit in the final quarter of last year reached Dh955 million, an increase of 22 per cent on the Dh781m it made during the same period a year earlier.

Nakheel said the jump in profits, which comes at a time when most experts say that property prices and rents in the city continued to edge downwards, came from an increase in property handovers and an expansion in its retail portfolio.

During last year, Nakheel said it handed over 1,426 homes and land plots, primarily in Palm Jumeirah, Jumeirah Park, Al Furjan and International City. That was a 40 per cent increase on the 847 unit handovers in 2015.

The company said that occupancy rates at its 18,000-strong residential leasing portfolio in Dubai stood at “almost” 100 per cent.

Revenue from its retail portfolio increased by more than 70 per cent, thanks to the addition of nearly 400,000 square feet of leasable space, mostly at its Ibn Battuta Mall expansion, bringing the total operational leasable space to 4.3 million sq ft. The company is planning a number of retail projects, which will take its total leasable space to 17 million sq ft.

Hospitality revenue jumped by 50 per cent as the company opened its first two hotels at Dragon Mart and Ibn Battuta Mall, with a total of 623 rooms.

The company, which was taken over by the Dubai government in the wake of the global financial crisis.

In August, Nakheel paid off its final trade creditor sukuk bond, marking the end of a five-year restructuring process that effectively paves the way for the developer to raise more bank borrowings and fund an ambitious construction programme – something it has not been able to do since the debt crisis and its subsequent takeover by the government.

“2016 was a momentous year in which we met and completed all of our restructuring obligations by repaying all Dh4.3 billion of the trade creditors sukuk from our own resources – and recorded our highest-ever net profit since Nakheel’s inception,” said Ali Rashid Lootah, Nakheel’s chairman.

Nakheel plans to award ­Dh10bn worth of contracts this year, compared with about ­Dh3bn last year. Nakheel’s results came a day after Emaar Malls, the company behind ­Dubai’s largest shopping centre, The Dubai Mall, reported a 4 per cent increase in fourth-quarter net profits – missing analysts’ expectations as visitor numbers to the tourist attraction remained flat.

Last month, the broker JLL said the Dubai property market was “close to its cyclical trough” after two years of falling property prices.

It said 14,600 new homes were completed in Dubai last year – the highest number since 2012, when 16,000 new homes were delivered.

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