Damac revenues up at Dh2.4b in H1

Damac Properties, Dubai's largest private property developer, posted a healthy increase in revenue but slipped into the red in the first half of 2020 due to challenging market conditions, as well as a decline in sales during the coronavirus outbreak and subsequent lockdowns.
It posted a net loss of Dh387 million in the first half, compared to a Dh82 million profit in the same period last year. Its total revenues increased 26.3 per cent to Dh2.4 billion while booked sales fell 40.6 per cent to Dh1.05 billion.
Hussain Sajwani, chairman of Damac Properties, sees the market remaining tough for the next two years but believes that Dubai Expo can help absorb some of the excess supply in the market.
"2020 saw a relatively good start to operations. However, in March we witnessed the global pandemic of Covid-19... subsequent lockdowns and social distancing measures introduced had a negative impact on sales and business activity. Resulting travel restrictions impacted the economy and the real estate sector and we will see a difficult market for the coming 18 to 24 months," said Sajwani. "However, we are optimistic that the lead-up to Dubai Expo at the end of 2021 will allow some of the excess real estate supply be absorbed."
Sajwani added that Damac remains extremely strong from a balance-sheet perspective. Ratings agency S&P recently said liquidity at Dubai's real estate corporates remain sufficient to meet their short-term obligations but most firms are likely to roll over their short-term bank borrowing to preserve cash, with the exception of Damac. The ratings agency believes that Damac will continue to pay its bank debt in line with its track record and commitment.
The company repaid a substantial share of its short-term bank debt in the first quarter and has remaining short-term debt of about Dh33 million in 2020 prior to a large $500 million sukuk maturity in April 2022. As of June 30, gross debt stood at Dh3.5 billion, down by Dh377 million during the first half of the year.
Cash and bank balances were at Dh4.4 billion and development properties stood at Dh9 billion. Shareholders' equity was reported at Dh13.6 billion as of June 30. Total assets fell to Dh22.6 billion compared to Dh23.8 billion as of December 31, 2019. Its deliveries crossed 30,000 in the first half, around 1,250 of which were in the Akoya master community and Business Bay. In order to maintain balance between supply and demand in the market and weak market condition, Sajwani said the company won't be launching new projects and remains focused on selling completed and nearly-completed inventory.
waheedabbas@khaleejtimes.com