Damac reveals over one billion dirhams in losses for 2020
Dubai-based developer Damac Properties has revealed losses of over AED1 billion ($272m) for 2020, blamed largely on the impact of the global coronavirus pandemic.
Financial results released on Sunday show losses for the year increased from AED37m ($10m) in 2019 to AED1.039bn last year. Total revenues stood at AED4.7bn ($1.3bn), which were up from AED4.4bn ($1.2bn) in 2019; while booked sales for the period were AED2.3bn ($626.3m) against AED3.1bn ($844m) for the previous year.
Damac shares slumped as much as 4.8 percent on Sunday morning, the most in about two months, to trade at AED1.20. It was the biggest drag to Dubai’s DFM General Index, down 0.1 percent.
Hussain Sajwani, chairman of Damac, said: “2020 was a very tough year for all property developers in the UAE and Damac felt the negative impact just the same. With Covid-19 still prevailing across the world, tourism has dramatically fallen, which has been a critical force that drives Dubai’s economy and boosts its property market.”
As of the end of last year, the company’s gross debt stood at AED3.2bn ($871m), with cash and bank balances AED4.2bn ($1.1bn).
Damac delivered 2,945 properties last year in Akoya and Business Bay developments. Total assets were worth AED21.1bn ($5.7bn) compared to AED23.8bn ($6.5bn) for the end of 2019.
Sajwani has been advocating for a moratorium on construction in Dubai, the Middle East’s tourism and financial hub, where a property glut has driven home prices down by more than 30 percent since 2014.
The government was forced to set up a committee to manage supply and demand as some of the city’s largest developers continued to build.
After resisting calls to stop, the head of Dubai’s biggest developer Emaar Properties, Mohamed Alabbar, in December said his company had paused all new construction temporarily.
Sajwani admitted he did not envisage a quick fix from the economic effects of the Covid-19 crisis.
He said: “I anticipate it will take at least 12-24 months to see a substantial recovery. We must remain patient and adopt smart and innovative solutions going forward.”
"There is a clear pattern forming with Damac at the moment that they are continuing to build residential developments, but evidently from their results, they are not selling enough property.
"While developers should expect a long wait for the property market to stabilise, action needs to be taken by Damac to balance the books."
Residential real estate prices in Dubai registered a marginal 0.1 percent increase in values in January compared to the previous month, an early sign of growth for the first time in five years, according to consultants ValuStrat.