Jabal Omar Development, the real estate company that owns a number of mixed-use towers close to Makkah's Grand Mosque, swung to a second-quarter loss as revenue declined and allowances for expected credit losses increased.
The developer reported a net loss of 465.2 million Saudi riyals (Dh455.5m) for the three months ending June 30, compared to a profit of 29.75m riyals a year ago, it said in a statement to the Tadawul stock exchange, where its shares trade. The statement did not include a credit loss figure.
Revenue dropped 99.5 per cent to 1.39m riyals during the period “because operations of hotels and commercial mall were shut down (March to June 2020) due to the precautionary measures taken to limit the spread of the coronavirus pandemic,” it said.
Other income also dropped due to a decline in fair value of investments, while financing costs rose during the period, according to the statement.
Jabal Omar, which is one of the biggest publicly-listed real estate companies in Saudi Arabia, owns six hotels and a commercial mall in towers overlooking the Grand Mosque in Makkah. It is continuing development at the site – a mega-project of more than 2 million square metres.
During the first half of 2020, the company recorded a loss of 682.43m riyals compared to a profit of 31.37m riyals during the same period last year.
The group’s current liabilities exceeded its current assets by 2.17 billion riyals as of June 30, according to the filing. Accumulated losses at the end of June amounted to 864m riyals, equivalent to 9.3 per cent of the company’s capital of almost 9.3bn riyals.
In May, Saudi Arabia tripled VAT from 5 per cent to 15 per cent to shore up the country’s finances that have been hit by low oil prices and the coronavirus pandemic. The move affected a range of sectors in the kingdom, including real estate. To soften the blow, the country’s minister of housing agreed to absorb the tax increase for first-time buyers on units worth 850,000 riyals or less, in an effort to stimulate demand for affordable homes.