Developer books revenue from the handover of its Motor City development in Dubai
Union returns to profits
Union Properties swung back into the black yesterday as it booked revenue from the handover of its Motor City development in Dubai. The emirate's third-largest developer by market value said net income climbed 67 per cent to Dh50 million (US$13.6m) for the first quarter of the year, compared with the first three months of last year. But it also set aside a Dh70m provision for losses on the valuation of investment properties. The swing to profit follows losses last year totalling Dh498m.
Khalid bin Kalban, the chairman of Union Properties, said on Thursday evening he was optimistic the company would remain profitable for the rest of the year through asset sales and rental income on its portfolio of villas and apartments. While property companies have been hit hard by the rapid decline in house prices over the last 20 months in Dubai, some have recorded profit increases in the first quarter as they handed over units to investors and booked final payments as profits.
Emaar Properties, the region's largest developer, last week said its first-quarter profit had tripled from the first quarter last year, helped by its malls and hotels. Union Properties is trying to sell assets including the Ritz-Carlton hotel, which has been priced at Dh1.5 billion. Mr bin Kalban said the hotel, which was due to open at the Dubai International Financial Centre (DIFC) this month, had attracted at least seven possible buyers.
Nabil Ahmed, the head of research for the region at Deutsche Bank, said: "Whether or not the company will be successful at disposing of the assets to get cash in and restructure the balance sheet remains to be seen." Union Properties is also seeking to sell other hospitality assets, including two Marriott Executive Apartment blocks, one in Deira and the other in the Green Community. Meanwhile, two companies are "being evaluated" to take a 50 per cent share in Emicool, its district cooling unit. The company also plans to transfer 5,000 units, divided equally between residential and commercial, to its rental portfolio, which could be worth an estimated Dh500m a year.