21/08/2014 17:59 AST
Nakheel has announced a 54 per cent leap in profits for the first half of 2014, underscoring the strong recovery in the Dubai property market.
Net profit reached Dh1.85 billion in the six months to the end of June, as handovers of completed developments reached new highs and rentals approached full occupancy levels.
Ali Rashid Lootah, the chairman of government-owned Nakheel, said: “These robust financial results reflect the growth witnessed in the real estate sector in Dubai, where Nakheel continues to play a strategic role. Since the financial year ending 2010, Nakheel has reported a year-on-year increase in net profit. Our financial performance reflects the strength of the underlying business, increasing investor trust and confidence in Nakheel and the ongoing support of the Government of Dubai.”
The recovery in Nakheel’s financial position – with strong cash flow from completed projects and continuing tight control of costs – has enabled it to repay loans borrowed from banks in the restructuring in 2010 of Nakheel and its then parent, Dubai World.
The group will repay all of the Dh7.9bn it owes to bank creditors by next month, nearly four years ahead of the schedule agreed in 2010.
Mr Lootah said: “With the bank debt repaid ahead of time and new cash generating assets coming on stream, Nakheel is well on course to further strengthen its business and financial position going forward.”
The early repayment could also further transform Nakheel. Mr Lootah has said that he would consider a stock exchange listing of the company once the debts had been repaid, but with the slate wiped clear well ahead of plan, there is speculation that an initial public offering of shares in all or part of the company could take place sooner than expected.
A Nakheel spokeswoman declined to comment on suggestions of an early IPO. Any share flotation would be announced “when appropriate”, she added.
Emaar, the biggest developer in the UAE, is in advanced plans to sell shares in its malls business on the Dubai Financial Market, a move that could be announced as early as September, according to people close to the initiative.
There has been speculation that Nakheel could also spin off its retail, leisure and hotels business in an IPO designed to highlight the value of recurring revenue from outside the traditional property development sector.
In a statement Nakheel said: “Strong revenue from property development together with improving performance in Nakheel’s retail, leasing and leisure businesses contributed to these robust results.”
The pace of handover of completed units has accelerated; some 627 units were passed to customers in the half year. “The retail and leasing businesses witnessed almost full occupancy of the available units for lease. Nakheel’s leisure business also saw an improved performance on previous years,” the statement added.
Nakheel has launched more than 20 new projects since the restructuring. It is currently developing a range of new elopements in the residential, retail, leasing and hospitality sectors. Among them are Nakheel Mall; The Pointe; Deira Islands Mall; Deira Islands Night Souk; extensions to Dragon Mart and Ibn Battuta; community retail centres at Jumeirah Park, Al Furjan, International City, Discovery Gardens and Badrah; and residential and retail leasing units at Warsan Village with a new development of 1,000 villas for lease.
Nakheel is also set to build 10 hotels – from five-star luxury establishments to simpler, budget-style accommodation – over the next five years. Among them are The Palm Tower on Palm Jumeirah, several establishments at Deira Islands and hotels at Dragon Mart and Ibn Battuta.
The National
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