Complex Made Simple

Nakheel posts $98.6m profit in first quarter

Nakheel, the Dubai-based developer of the emirate's palm-shaped artificial islands, has reported that it made a profit of Dhs362m ($98.6m) in the three months to March 31, as compared to a loss of Dhs36m in the year-earlier period.

The company said revenues in the first quarter nearly tripled to Dhs1.35bn, boosted by the handover of more properties and a strong performance from its retail and leasing operations.

“The positive results of 1Q, following from the robust financial results achieved in the year 2011 continue to indicate a relatively more stable real estate market,” Nakheel said in a statement.

The company also said that effective cost control measures resulted in reducing cost overheads by Dhs22m, compared with the corresponding period in 2011. Nakheel’s net assets stood at Dhs24.5bn at the end of March, a Dhs1bn increase over the previous year period.

After racking up billions of dollars in debt during the height of the real estate market bubble in Dubai, Nakheel found itself in deep financial trouble in 2009 when property prices crashed in the wake of the global financial crisis. The developer wrote off $21bn of its real estate assets, and 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.

But since restructuring its debt the company’s performance has been on the upswing, as it posted a profit of Dhs1.3bn for last year, up 33% on the year before. On the heels of its recent turnaround, Nakheel has announced major expansion plans, including the launch of a new mixed-residential development on Palm Jumeirah. The two-building project named Palm Views will include a total 192 studio units all priced at Dhs1m with retail space for restaurants and selected shops on the ground floor.