Dubai developer Deyaar's profit falls in 2016 in face of 'challenging' market
Deyaar’s profit fell by a quarter last year despite rising revenue as the Dubai property developer said it faced a “challenging” market.
Net profit fell 25.7 per cent to Dh216 million from Dh291 million a year earlier, according to a filing.
Deyaar said that company revenue for last year increased 66.5 per cent compared with a year ago to Dh428 million. The company said that was mainly because of construction progress at The Atria and Mont Rose hotel apartment projects.
Deyaar was initially formed as the property management arm of Dubai Islamic Bank and then spun off as a private property company floated on the Dubai Financial Market.
In 2014, after it was hit hard by the global financial downturn, the company started to work on refocusing its existing developments towards Dubai’s hotel sector ahead of Expo 2020.
Deyaar said it was currently developing about 1,000 hotel rooms in Dubai.
The company said that it expected to complete construction of The Atria and Mont Rose hotel apartment projects in Business Bay and Dubai Science Park later this year, and to start work on a first phase of its Dh3 billion Midtown mixed-use project in International Media Production Zone.
However, the moves come as Dubai hotels come under continuing pressure from an increase in supply.
According to JLL, room rates in Dubai fell by 10.5 per cent in the first 10 months of last year compared with the same period the previous year as 18 new hotels added 6,733 rooms during the first eleven months of the year.
In December, Deyaar started offering guaranteed annual returns of 7 per cent for two years to investors on serviced apartments in The Atria – a 30 storey tower in Business Bay – that will be managed by Millennium & Copthorne Hotels when the building is expected to be completed later this year.
“The measures taken by Deyaar to generate efficiencies, optimise our business model and deliver great product to the market have continued to produce results in 2016,” said Saeed Al Qatami, Deyaar’s chief executive. “While there is no doubt the market faced challenges in 2016, real estate remained a standout asset class for investment.”
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