Union and Nakheel at vanguard of recovery

Profits at major Dubai developers soared in the first half of the year, underscoring a revival in the emirate's property market and the overall economy.

Union Properties says it will focus on mid-size developments to provide quicker returns. Pawan Singh / The National

Profits at Dubai's big developers soared in the first half of the year, underscoring the returning health of the emirate's economy and its once ragged property market.

Both Nakheel and Union Properties yesterday reported robust increases in profits, joining Emaar Properties in benefiting from an economic recovery across Dubai in the first six months of the year.

"The whole market is recovering," said Ali Rashid Lootah, the chairman of Nakheel.

"We are seeing demand in all our properties across the board. Six months ago, most of the focus was on the Palm Jumeirah, now we are selling in all our properties in the emirate."

Nakheel achieved net profits of Dh767 million (US$208.8m) in the first six months of the year, an increase of 36 per cent over the same period last year.

Handovers of new properties throughout Dubai meant revenues increased to Dh3.1 billion from Dh1.4bn in the first half of last year.

Meanwhile, Union Properties, which constructed some of Dubai's high-profile projects including the Ritz-Carlton hotel in the Dubai International Financial Centre (DIFC), reversed huge losses of Dh439m for the first six months of last year and reported a net profit of Dh106m for the same period this year.

The property builder said it would now focus on mid-size developments to provide quicker returns.

"With the real estate sector on the path of recovery, together with improved economic indicators in Dubai and the UAE, [Union Properties] is currently evaluating various mid-sized development projects offering shorter turnaround times and reasonable profitability and incremental cash inflows," the company said.

Union's share price increased more than 3 per cent in early trading on the Dubai Financial Market General Index as a result of the positive news. They closed up 2.89 per cent at 39 fils.

Results from major developers have confirmed the improving economic environment of Dubai and its recovering property market.

This week, Emaar, based in Dubai and one of the biggest developers in the Arabian Gulf, recorded operating profit of Dh1.22bn for the first six months of the year, up 45 per cent on the same period last year, on broadly flat revenues of Dh3.9bn.

Moreover, total property transactions increased to Dh4bn in the second quarter compared with Dh3.1bn of deals in the first quarter, a report from the property broker CBRE showed last week.

The retail, aviation and hotels sectors are also all witnessing record growth in numbers as tourists continue to flood into the Emirates and residents are feeling more confident to spend.

Sheikh Mohammed bin Rashid, Vice President of the UAE and Ruler of Dubai, last week said the financial crisis that continued to plague much of the western world was over in the UAE.

On the residential and commercial front, Nakheel said it had delivered about 3,500 units to customers since the beginning of its financial restructuring in 2010. These concerned several developments including the Palm Jumeirah, Jumeirah Village, International City, Al Furjan and Jumeirah Heights.

The developer faced severe financial problems following the fall in property prices in Dubai in 2009 and completed a Dh60bn financial restructuring last year.

Nakheel has made cash payments of Dh8.6bn to its trade creditors since the commencement of the restructuring and reduced longer-term customer liabilities by Dh7.2bn out of a total of Dh9.9bn.

Union Properties reported Dh1bn in revenues for the first half, compared with Dh2.2bn in the same period last year with the fall reflecting the sale last year of Index Tower and Limestone House in the DIFC.

Sales in these two buildings helped to reduce total bank debt from Dh6.2bn at the end of the first half of last year to Dh3.8bn this year.