Dubai developer builds more revenue-generating assets
UAE developer Nakheels net profits for 2014 were AED3.7bn ($1bn), up 43 per cent on the AED2.6bn made in 2013.
The growth in profits came as the firms revenues fell to AED7bn from AED9.3bn last year.
The better margins are due to our improved measures of controlling costs, says Ali Rashid Lootah, chairman of Nakheel. [Revenues for] 2013 were higher due to deliveries of old communities, which were sold at different prices, so the revenues were bigger, but the margins were less.
For 2015, Lootah expects profits to grow and revenues to stay level. We will maintain profit growth this year because there are a lot of new projects that we will deliver this year and next, and there is more to come, he says. Our revenues will stay around the same, but we will have healthier margins.
For the future, Nakheel will bolster its revenues by developing more assets that produce recurring revenues. In 2014, the company generated AED1.3bn from its retail, leasing and hospitality portfolio.
We will see an increase in revenues once we complete our retail, leasing and hospitality projects at the end of 2017, says Lootah. We expect revenues from them of AED7.5bn. That figure will grow as we have lots of ideas to increase our revenues further.
The developer is already busy building new assets. In 2014, it awarded AED5.3bn of construction contracts and expects this figure to grow to AED7bn in 2015.
During the fourth quarter of 2014, Nakheel tendered a series of new schemes including the Palm Gateway, the West Beach Club, the Palm Tower, and various packages on the Deira Island development. In addition to the contracts that have already been tendered, the firm plans to tender other new projects such as its Nad al-Sheba development that will comprise villas that Nakheel will own and lease.
Nakheel cash collections*
AED10bn from existing customers
AED11bn from new sales
AED7bn from retail and leasing
*=Since 2010. Source: Nakheel
Follow Colin Foreman on Twitter: @MEEDColin
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