(MENAFN - Khaleej Times) Property developer Nakheel posted a net profit of Dh1.3 billion for the financial year ending December 31, 2011 reflecting an improvement of 33 per cent over 2010, the company said on Monday.
The increase in profit in financial year 2011 is primarily due to the fact that as against impairment loss of Dh2.7 billion recorded in financial year 2010, there was no impairment loss in 2011.
The net assets of the group improved from Dh8 billion at end December 2010 to Dh24 billion at end December 2011 - the result of a successful restructuring, diligent execution of the revised business plan and improving market conditions.
"These robust financial results are reflective of the company's singular focus on implementing its approved restructuring plan and contributing to the recovery of the Dubai real estate market. Nakheel successfully recommenced all its near term projects and started delivering properties as scheduled during 2011. Most of the properties currently under construction are expected to be handed over to customers in the intervening period to first quarter of 2013," Nakheel said in a statement. Nakheel is handing over 40 to 50 units per day.
Nakheel chairman Ali Rashid Lootah told reporters that the cumulative profit for 2010 and 2011 post restructuring was Dh2.25 billion. "I can assure you from early figures that 2012 will be much better for us, very promising."
"The year 2011 was a very good year for us. We are doing fantastic across the board in all activities. We are seeing demand in most properties. This is a good sign for the market," he said.
About challenges faced by Nakheel in 2012 and beyond, Lootah said, "These are ongoing challenges and include delivery of units to investors, continuing with new developments of Nakheel especially in retail to maintain healthy flow of cash, and bring new ideas. These are normal business challenges."
A company statement on 2011 results, said Nakheel recorded revenue of Dh4.1 billion for 2011, broadly in line with a revenue of Dh4.2 billion for 2010. In financial year 2011, 820 units, including land parcels, were delivered to customers. Revenues were driven by the handover of properties in several of the group's developments, mainly Palm Jumeirah, Jumeirah Village, International City, The World and Al Furjan.
Retail and residential leasing continued to perform well. The year 2011 witnessed almost 100 per cent occupancy in Ibn Battuta Mall and Dragon Mart, reflecting a buoyant local retail market. Occupancy for residential leasing in 2011 showed marked improvement at an average of 80 per cent as compared to FY10 following the rationalisation of leasing rates in FY11 and increased demand witnessed for almost all the areas where Nakheel has residential buildings for lease.
"People are buying in the new project launched by Nakheel. Prices and rentals are increasing. In Palm Jumeirah they are shooting. When we see high-end properties appreciating, which is because well-to-do people are coming to Dubai and some of them coming here to evade Europe's high taxation, it means the market is improving. This is a classic example," Lootah said.
In 2011, the group continued to focus on reducing its costs. Total operating costs for the group decreased from approximately Dh1.23 billion in 2010 to about Dh1.17 billion in 2011, a drop of about Dh60 million.
Total liabilities of Nakheel Group decreased from approximately Dh61 billion in 2010 to approximately Dh41 billion as of 2011. "These liabilities are towards lenders, trade creditors and investors," Lootah said.
Lootah said that out of total claims of Dh8 billion from trade creditors so far Dh2.7 billion had been cleared and Dh5.3 billion of claims are still under negotiations. A second Dh240 million tranche of sukuk will be issued to trade creditors by the end of April. Lootah added that a third tranche of the sukuk is expected to be issued in a couple of months, probably in June.
The statement said that Nakheel board of directors would like to sincerely thank Dubai government and all of Nakheel's stakeholders including business partners, management and staff, for their continued support and team work in delivering these results as the company continue to strive to maximise value for its stakeholders.