Delayed projects completed, land plots at its new luxury Akoya golf course scheme sold and increased number of off-plan sales.
Damac profits boosted by plot sales at Akoya golf course project in Dubai
First quarter profits at Damac Real Estate Development soared by 79 per cent, helped by the sale of plots at its Akoya golf course development in Dubai. Damac, a company known for offering customers Lamborghinis and yachts when they buy luxury flats, reported that net profit for the first three months of this year grew to US$210 million from the $117m the company made a year earlier.
Revenue for the period nearly doubled, increasing 94 per cent to $435.8m from $224.6m as the company completed and handed over 577 homes at its Cosmopolitan and Water’s Edge mixed use blocks that were delayed by the global financial crisis and sold land plots at its new luxury Akoya golf course scheme.
The company said that it was on course to deliver 4,000 to 5,000 units in Dubai in 2014.
Sales booked during the period rose by 153 per cent to $864m from $341m the previous year, driven by an increase in the number of property launches.
Damac said that the amount of money it had received in advances from customers also increased over the period to $1.86 billion – an 8.7 per cent increase on last year – the company reported in a filing to the London bourse. Damac said this was thanks to an increased number of off-plan sales and cash collection from customers during the quarter.
Damac started launching offplan luxury villas at the 42 million square feet development last summer. The project is ultimately intended to comprise 7,367 luxury homes as well as a Donald Trump-designed branded 18 hole PGA Championship golf course.
Total assets stood at $3.5bn at the end of March – 16 per cent more than they were valued at at the end of December, Damac said, as the company increased the amount of cash it held.
“The continued economic recovery in our core market of Dubai has supported strong sales in the first quarter of 2014, contributing to another good performance from Damac and a highly profitable start to the year, as well as substantial growth in net assets,” said Hussain Sajwani, executive chairman and chief executive.
“We continue to see solid levels of demand in the luxury market, which is reflected in the growth in rental levels and residential values. We continue to look for suitable new land parcels ensuring we can provide supply to meet demand,” he added.
Damac raised $348m when it listed on the London Stock Exchange via global depositary receipts in December. In April the company closed a $650m sukuk.
Damac added it was “well capitalised” to increase its land bank, adding that the outlook in the Dubai property and hospitality markets in which it operates “remains positive”.
“Damac’s strong project pipeline and presence in a strong market translate into attractive profit margins,” said Hemant Dharnidharka, the head of credit research at SJS Markets in a note. However, he warned: “The company displays high exposure to Dubai and mainly to a single project, Akoya. The company has never undertaken such a large project in the past and therefore could face execution or unforeseen event risks.”
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