Major developers in the UAE have announced their plans to counter shrinking revenues in 2017 as experts warn it will be another tough year for the country’s real estate market.
For the property sector, 2016 was a year of correction and a number of construction and real estate companies suffered.
Developers’ quarterly profits were hit as the sluggish economic growth, dampened by low oil prices and reduced public spending, and a weaker business sentiment shook the market.
Among the listed construction firms, Emaar Properties and Damac Properties were the only two companies to report positive figures for the fourth quarter of 2016.
Aldar Properties expects lower sales in 2017, says its chief financial officer.
In 2016, Aldar reported total sales of AED3.5 billion but that is likely to fall to AED3.0bn this year as the company focuses on affordable housing, says Greg Fewer.
The state-linked builder of Abu Dhabi’s Formula One circuit, reported a 0.9 per cent decline in fourth quarter net attributable profit.
“We are seeing some headwinds in the market right now,” he said.
The company may also refinance its $750 million sukuk maturing in 2018, Fewer says, without elaborating.
Dubai-based Drake & Scull narrowed its 2016 net loss to AED786.9m AED938.8m in the previous year. But the contractor’s net loss for the fourth quarter of 2016 amounted to AED490m, compared to a profit of AED14.7m a year earlier.
As part of its turnaround and capital restructuring plan, the company is considering proposing a rights issue of AED500m in equity to a strategic investor.
It has also secured a binding offer from UAE-based Tabarak Investment.
Dubai contractor Arabtec Construction reported a net loss attributable to the shareholders of its parent of AED3.41bn for the year 2016, compared with a loss of AED2.35bn the year earlier.
The firm has said that its board is seeking shareholder approval for a AED1.5 billion rights issue to recapitalise the company.
Meanwhile, Emaar Properties intends to reopen its landmark Address Downtown hotel by the end of the year, more than a year after the skyscraper was gutted by fire following an electrical fault.