Nakheel, a Dubai developer, yesterday announced a profit of Dh1.3 billion (US$353.9 million) for last year as a leading property consultancy finally said the emirate's residential market had bottomed out after more than three years of falling prices.
"It has been a good year," said Ali Rashid Lootah, the chairman of Nakheel. "It's a good sign of recovery of the market. We've seen the demand in most of our properties increase, and I can also assure you that 2012 - from the early figures we have - will be much better.
Nakheel profits for last year rose 33 per cent on the previous year. It was boosted by the absence of impairment charges that weighed heavily on results the previous year. "There is no more impairment now because the market is stabilising and the market is picking up," Mr Lootah said.
Property prices in Dubai have fallen by up to 60 per cent from their peaks.
But the residential property market in Dubai now appears to have bottomed out, with data showing prices are now at rates similar to early 2008 levels, according to research by Jones Lang LaSalle.
But prices still remain off their peaks reached in the third quarter of 2008, the property consultancy said in its first-quarter report on Dubai.
"Despite seeing a sharp fall from its peak levels in the third quarter of 2008, the villa market began to see some uptick towards the end of 2011 and this trend has continued into 2012, with sale indices now 3 per cent higher than in January 2008," Jones Lang LaSalle said.
"Villa sale indices are still 25 per cent lower than at their peak in the third quarter of 2008. Apartment sale indices have also begun to stabilise but remain at lower levels, 34 per cent down on the peak in the third quarter 2008."
Jones Lang LaSalle based its analysis on property price indices from Reidin.com.
Indexes from Reidin.com show rents for villas have returned to levels reached in 2009, but apartment rents are still up to 30 per cent lower.
"The villa market is expected to continue to outperform the apartment sector and whilst prime residential assets in well established locations continue to see improved performance, secondary buildings and locations are still suffering from rental and pricing declines," Jones Lang LaSalle said.
Nakheel, which completed a Dh60bn restructuring process last August, reported that revenue reached Dh4.1bn last year compared with Dh4.2bn for 2010. Revenues were driven by the handover of properties in its developments and retail and residential leasing, the developer said.
"The positive performance of some of Nakheel's assets, especially their retail and recently launched residential assets on the Palm, reflects our identification of the flight to quality and well managed developments," said Alan Robertson, the chief executive at Jones Lang LaSalle Middle East and North Africa.
Revenues from its retail division increased by 20 per cent last year, with almost 100 per cent occupancy at Ibn Battuta Mall and Dragon Mart, reflecting a buoyant retail market in Dubai, Nakheel said.
Operating costs decreased to Dh1.17bn last year compared with Dh1.23bn the previous year.
Nakheel's liabilities decreased to Dh41bn at the end of last year from Dh61bn at the end of 2010.
"This is from liability towards lenders, trade creditors and investors," said Mr Lootah. "Because we are paying to our contractors, we are delivering units to investors and we are mitigating long-term liabilities for the long-term projects, plus there was a payment of an earlier sukuk."
Net assets increased to Dh24bn last year compared with Dh8bn the previous year.
Nakheel last week started work on a townhouse development on the Palm Jumeirah, which it says is a positive indicator for the market.
"We launched a new project and people are buying the new product and paying down 40 per cent," said Mr Lootah. "We see a good recovery. Villas are in demand, prices are increasing, rents are increasing. It depends which segment of the market. In our properties, prices on Palm Jumeirah and Jumeirah islands are shooting up. You cannot generalise. It's location, location, location."
rbundhun@thenational.ae
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