Dubai developer Deyaar reports falling profit amid market woes
Dubai-listed Deyaar Development reported a 7.6 per cent drop in first-quarter net profit on Thursday, adding to the list of property developers who are wary of worsening market conditions and are resorting to measures, including cost-cutting, to improve profitability.
The company’s net profit for the period under review was AED51 million, down from AED55.2m during the same period a year ago.
However, its revenue rose to AED60.2m in first three months of 2016, from AED36.2m during the corresponding period last year.
Mohamed Al Rumaithi, Chairman of Arabtec, which made a net loss of AED2.35 billion in 2015, said on Wednesday that the company could break even this year and could make a profit the next year.
“2015 was a severe year, 2016 is still tough. I am confident of 2017, that’s when I see (profit),” said Al Rumaithi.
He added that the company was considering options to cut costs, including through job cuts, to counter difficult market conditions.
Earlier this week, Reuters reported that the chairman of Emaar Properties, Mohamed Alabbar, admitted that he was “really scared” of market conditions in 2016.
However, he said that the performance of Dubai’s largest developer in the first quarter looked good after some severe cost-cutting.
“We were really scared of 2016. Preparing for our cost budget, we basically went back to a cost budget base of two years ago, just to be cautious,” remarked Alabbar.
Consultancy firm JLL has revealed in its latest Dubai Real Estate Market Overview that Dubai’s real estate sector further softened in the first quarter of the year, as continuing lower oil prices and the strong US dollar continued to impair the purchasing power of the region’s investors.