Union Properties loss widens on provisions

Union Properties reported a loss of Dh439 million in the first half of the year after the Dubai developer took provisions against investment property.

Union Properties, a Dubai developer, said losses widened in the first half of the year to Dh439 million from Dh299m in the same period last year as it took provisions against valuation of properties.

Revenues increased to Dh2.25 billion in the first half of the year, up from Dh1.56bn a year earlier, according to financial statements posted on the Dubai stock exchange yesterday.

The company took a fair value loss of Dh595.6m on valuation of investment properties.

"The valuation has been undertaken against a background of extreme instability in global finance markets, which has also impacted the UAE financial market," the statement said.

"It is yet to be fully seen how these changing conditions in the local property market impact upon pricing in the short to medium term because the combined impact of the current macroeconomic instability, the reduction in financial liquidity and legislative changes is that potential buyers and sellers may be unwilling to commit to transactions at the current time and there are few transactions taking place in the market."

Once the second-largest developer in the emirate, Union is best known for MotorCity, the car racing-themed mixed-use development in Dubai.

But the company has been buffeted by the downturn in the market. The group has financial commitments of Dh6.12bn, down from Dh6.9bn, of which Dh1.7bn is due within 12 months from the reporting date, the statement added.

The company's shares listed on the Dubai Financial Market rose 3.5 per cent to 38 fils yesterday.

Union Properties began handing over units in two of its signature Dubai International Financial Centre projects this year: Index Tower, an 80-storey development designed by Foster & Partners, with offices and 40 storeys of apartments; and Limestone House, a luxury apartment development adjacent to the Gate Precinct.

Last November the company announced the sale of the Ritz-Carlton in Dubai to a private company in Abu Dhabi for Dh1.1bn. Ten months earlier it had announced an asking price of Dh1.5bn.