The Dubai-listed Union Properties yesterday said that its second-quarter net profit plummeted 96 per cent because of lower property management and sales revenue, and lower gain on property valuations.
Profit attributable to the shareholders of the company plunged to Dh19.4 million from Dh527.3m, the firm said in a statement to the Dubai Financial Market.
Income fell 64 per cent to Dh317.9m from Dh884.1m in the year-earlier period, while income from property management and sales dropped 59 per cent to Dh19.7m from Dh48.7m.
The gain in valuation of properties was Dh121.4m, compared with Dh711.5m last year.
“The earnings fell year over year mainly due to lower gain on valuation of properties during the quarter,” said Harshjit Oza, an analyst at Egypt’s Naeem Brokerage. “While we believe that property prices will continue to grow in 2015, the pace of growth has clearly slowed down. We expect UAE developers to record relatively lower mark to market valuation gains in 2015 vis-a-vis 2014.”
Union Properties, the developer behind Motor City, had reported an 84 per cent drop in first-quarter net profit on a sharp decline in other income.
Union Properties’ results jar with the performance of other property developers in Dubai that reported better-than-forecast earnings.
Emaar Properties, for example, beat analysts’ forecasts with a 16 per cent rise in second-quarter earnings.
Like many Dubai developers, Union Properties was hit hard by the global financial crisis. The developer has spent the past seven years tackling a massive debt burden, forcing the company to sell many of its key assets including the Ritz-Carlton hotel and substantial stakes in Limestone House and Index Tower to major shareholder Emirates NBD.
Property developers in Dubai could experience slower earnings growth this year because of weaker property prices and sales.
The number of completed property deals in Dubai has tumbled by more than two- thirds, according to the property consultancy JLL.
In June, the credit ratings agency Standard & Poor’s said Dubai property prices could fall between 10 and 20 per cent for the rest of this year and early next year, after rising for three consecutive years.
Union Properties’ shares closed flat at Dh1.16 in Dubai yesterday.
Comments ( 0 )
Post a Comment