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Nakheel was part of the Dubai World conglomerate that spooked financial markets in 2009 when it asked creditors for a debt repayment standstill. Satish Kumar / The National
Nakheel was part of the Dubai World conglomerate that spooked financial markets in 2009 when it asked creditors for a debt repayment standstill. Satish Kumar / The National

Nakheel's profits leap as it targets to deliver 3,000 units this year

Net profit at Dh1.2 billion in the first six months compared to Dh767 million last year.

Nakheel first-half profits jumped by more than 57 per cent as it accelerated the handover of homes ahead of more than US$2.2 billion in loans that come due in 2015

Net income increased to Dh1.2bn as The Palm developer handed over 1,400 units to their owners.

"The results reflect the ongoing support of the Government of Dubai and the commitment by Nakheel to delivering the post restructuring plan," the company said. "They also clearly demonstrate the continuing growth and strengthening of the real estate market in Dubai."

Revenues for the first six months stood at Dh4.23bn, a rise of 36 per cent from Dh3.1bn in the same period last year. The company said it was on track to deliver 3,000 units this year.

The period brought a "hive of activity, with continued customer handovers and ongoing construction of an increasing number of residential and retail projects", it said.

Dubai house prices soared before the market unravelled in 2008 and 2009, forcing thousands of investors into negative equity. Speculators buying and selling property beyond their means were partly blamed for the collapse, helped by an off-plan sales model that permitted speculators to place multiple deposits on units before flipping them.

"The real estate sector in Dubai has been picking up very strongly, driven by several fundamentals," said Rami Sidani, the head of Schroder's Middle East and North Africa desk. "Dubai is out of the woods, it's capitalising on its advanced infrastructure and given all the relative political instability in the region, it stands out as a safe haven with great infrastructure and great lifestyle. Nakheel's results are a reflection of that."

Nakheel was part of the Dubai World conglomerate that spooked financial markets in 2009 when it asked creditors for a debt repayment standstill. It restructured its finances in 2011.

Since then, it has delivered about 6,000 properties in locations including The Palm Jumeirah, Al Furjan, International City, Jumeirah Village, Jumeirah Park and Jumeirah Heights communities.

On Monday, JPMorgan Chase vouched for Nakheel's Islamic debt, saying default was improbable, after yields spiked amid investor worries over its upcoming repayments. Nakheel has $3bn coming due in 2016 in addition to its loans that come due in 2015.

"The Government is quite unlikely to let Nakheel default on its bond obligations in 2016 after supporting the company under much more difficult circumstances," said Zafar Nazim, an analyst.

In its financial results, Nakheel said that it "continues to focus on meeting its restructuring commitments to all its stakeholders".

The company made an interest payment of Dh206 million to its bank lenders in the first quarter of this year, the statement said. It also made a profit payment of Dh210m to its sukuk holders in the second quarter. Since its restructuring in 2011, it has paid more than Dh1.3bn in loan interest and sukuk profit payments, as well as Dh11.3bn to trade creditors and contractors.

The company said it had a "strong pipeline of projects under development across the residential, retail, leisure and hospitality sector with an objective of developing assets that are in demand and increasing the pool of cash- generating assets".

Those projects include Nakheel Mall and Hotel, The Pointe at Palm Jumeirah and extensions to Dragon Mart and Ibn Battuta Mall.

 

halsayegh@thenational.ae

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