UAE developer Nakheel announces record $1.35B net profit

Published February 1st, 2017 - 12:00 GMT
The 2016 results – which take Nakheel’s cumulative results since 2010 to Dh19.9 billion – follow improved year-on-year performances by the company’s retail, hospitality and residential leasing businesses. (File photo)
The 2016 results – which take Nakheel’s cumulative results since 2010 to Dh19.9 billion – follow improved year-on-year performances by the company’s retail, hospitality and residential leasing businesses. (File photo)

UAE-based Nakheel, one of the world’s leading developers, has announced a record net profit of Dh4.96 billion ($1.35 billion) for 2016 - the highest in the company’s history - up 13 per cent over Dh4.38 billion the previous year, thus indicating a stable and mature real estate sector in Dubai.

The top Dubai developer generated a net profit of Dh955 million for the fourth quarter, up 22 per cent on the Dh781 million posted for the same period in 2015.

These record-breaking results indicate a stabilising, mature real estate sector in Dubai, and reflect the sound business and economic policies followed under the leadership of HH Sheikh Mohammed bin Rashid Al Maktoum, Vice President and Prime Minister of the UAE and Ruler of Dubai, said the company in a statement.

The 2016 results – which take Nakheel’s cumulative results since 2010 to Dh19.9 billion – follow improved year-on-year performances by the company’s retail, hospitality and residential leasing businesses.

In addition, development, the company’s core business, continued apace to ensure that new projects are completed, adding further strength to the balance sheet.

During 2016, Nakheel handed over 1,426 land form and built form units, primarily in Palm Jumeirah, Jumeirah Park, Al Furjan and International City.

On the retail side, Nakheel said its revenue grew by more than 70 per cent in 2016 compared to 2015, proving that the strategy to create more company-owned, cash-generating assets is paying off.

In 2016, Nakheel Malls further expanded its operating retail portfolio by opening its phase one extension at Ibn Battuta Mall, neighbourhood pavilions at International City and Al Furjan and the Club Vista Mare restaurant plaza on Palm Jumeirah.

These added almost 400,000 sq ft of net leasable area to previously-existing retail assets, bringing the total operational leasable space to 4.3 million sq ft by the year-end, said the Emirati developer in its statement.

A host of other retail sector projects, which will bring Nakheel’s total leasable space to 17 million sq ft, is under development, it added.

The Dubai group said the revenue from its hospitality business jumped by 50 per cent in 2016 compared to the previous year.

During the year, Nakheel Hospitality commenced operations at hotels Dragon Mart (ibis Styles, operated by Accor) and Ibn Battuta Mall (operated as a Premier Inn), which have 623 rooms between them.

The response to these properties has been overwhelming, reflecting positively on the properties’ location and highlighting the demand in this sector. Both hotels are expected to further contribute to the company’s financial results during 2017 – their first full year of operation, it stated.

Nakheel continues to expand its footprint in this key economic sector by bringing new hospitality concepts and international brands to Dubai in line with the government’s vision for 2021, further strengthening the company’s overall asset base, it added.

Residential leasing also performed well in 2016, with occupancy rates remaining at almost 100 per cent.

With more residential leasing expected to become operational in 2017, this sector will continue to provide a steady source of revenue for Nakheelm, said the statement.  

Commenting on the record results, Nakheel chairman Ali Rashid Lootah said: "2016 was a momentous year in which we met and completed all of our restructuring obligations by repaying all Dh4.3 billion of the trade creditors sukuk from our own resources – and recorded our highest ever net profit since Nakheel’s inception."

"This historical milestone has been achieved by remaining focussed on implementing our business strategy. Inspired by our leader, HH Sheikh Mohammed, we believe in our ability to help deliver his vision for Dubai," he remarked.

"Under our ongoing commitment to maintaining the momentum in the local economy, Nakheel awarded construction contracts worth around Dh3 billion in 2016, and is set to award Dh10 billion worth this year," said Lootah.  

"The future is promising and we are confident that our strategy of having a diversified business will significantly benefit Nakheel and reinforce its position as one of the world’s leading real estate developers," stated the top official.

He said the company was currently working towards completing its healthy pipeline of projects and making them operational in the next few years, starting with The Pointe at Palm Jumeirah, one of its key hospitality and retail destinations, which is due to open this year.

"A month into 2017, we have already begun handovers to customers on some of our completed projects, signed agreements with new hospitality partners, released the first of many construction tenders and announced an investment of Dh150 million in cycle tracks across our communities, while later this year we will launch sales of our new project on Palm Jumeirah, Palm 360," he added.


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