Construction

Nakheel announces $98.6m in profits for first quarter of 2012

Developer says that results due to handover of more properties and strong performances from retail and leasing operations, adds that results indicate a ‘relatively more stable’ market

Nakheel, the Dubai based developer, has announced that it has made a profit of $98.6m in the three months to March 31, 2012, as compared to a loss of $9.80m in the same period last year.

The developer said that revenues in the first quarter of the year nearly tripled to $367.5m, boosted by the handover of more properties and a strong performance from its retail and leasing operations.

“The positive results of Q1, following on from the robust financial results achieved in the year 2011 continue to indicate a relatively more stable real estate market,” the company said in a statement.

The company added that effective cost control measures resulted in the reduction of cost overheads by $5.98m, compared to the previous year’s figures. Nakheel’s net assets stood at $6.67bn at the end of March, which represented a $272m increase from 2011.

When the real estate bubble in Dubai was at its peak, the Dubai owned developer had debts that numbered in the billions of dollars as it strived to meet the demand in the market. As a result, when the bubble burst in late 2009, the developer’s property prices crashed in the wake of the global financial crisis.

The developer was forced to write off around $21bn of its real estate assets, and as such, is now owned by the Dubai Financial Support Fund, which was set up to distribute $20bn of investment from Abu Dhabi and the UAE Central Bank.

However, since its debt was restructured, the company has seen an upswing in its performance, as it posted a profit of $353.9m for the last year, up 33% from the year before.

On the heels of this recent turn around, Nakheel has wasted no time in announcing major expansion plans, including the launch of a new mixed residential development on Palm Jumeirah. The two building project will include a total of 192 studio units, all priced at $272,257.

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