Damac Properties ‘holds its nerve’ amid Dubai real estate slump — CFO

The Dubai developer has not pulled or delayed any existing projects, and 2018 is likely to be a bumper year in terms of property deliveries, Damac CFO Adil Taqi said. (AFP)
Updated 14 August 2018
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Damac Properties ‘holds its nerve’ amid Dubai real estate slump — CFO

  • Damac’s second quarter profit from continuing operations fell by around 46 percent year-on-year to 378.2 million dirhams
  • Damac has no significant capital expenditure commitment for the rest of the year

DUBAI: Dubai’s Damac Properties, owner and operator of the only Trump-branded golf club in the Middle East, is confident of its financial position despite registering its worst quarter in terms of booked sales since the company went public five years ago, its chief financial officer said.
Damac is feeling the impact of a real estate market in Dubai that is under pressure because of lower property prices and subdued sales as new developments hit the market.
“In a cyclical market it’s important to have some sense of certainty over direction, and from that perspective, we’re satisfied,” Adil Taqi said in a phone interview on Tuesday after the publication of Damac’s results for the first half of 2018.
“We’re also satisfied in a way that every day in a weak cycle that we put behind us puts us closer to the turnout.”
Taqi said the firm was “holding its nerve” in terms of cash balances and payment plans.
Damac’s second quarter profit from continuing operations fell by around 46 percent year-on-year to 378.2 million dirhams ($103 million). Total revenues for the first six months stood at 3.7 billion dirhams, year-on-year growth of 5 percent.
Dubai’s real estate prices, hit by new supply, could decline by 10 to 15 percent over the next two years, after falling between 5 to 10 percent in 2017, according to S&P estimates earlier this year.
Damac has not pulled or delayed any existing projects, and 2018 is likely to be a bumper year in terms of property deliveries, the CFO said.
In the first half of the year, Damac delivered 1,490 units compared to 1,071 units in the same period last year. The company plans to deliver over 4,000 units in 2018.
Damac’s unsold inventory, which extends beyond Dubai, is about $400 million-$500 million, said Taqi. “In the short term, unless the market improves, this will build up slightly more.”
But the firm does not plan to sell assets to counterbalance the market slowdown. “We will not throw value away because we’re under pressure. We recognize we’re in a tough market and we need to be able to manage that.”
Damac has no significant capital expenditure commitment for the rest of the year, and currently has $2 billion in cash, of which $350 million-$400 million is unrestricted, or not earmarked for a specific purpose.
“We’re well capitalized, I don’t see any question over our cash ability,” said Taqi.
Damac has $270 million in Islamic bonds due early next year and plans to pay them down, rather than approaching the market to refinance them. It has around $180 million in bank debt that it mostly plans to refinance in the near-term, also to maintain relationships with local banks, he added.


Saudi Aramco Trading aims for 50% rise in oil trade volume in 2020

Updated 3 min 30 sec ago
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Saudi Aramco Trading aims for 50% rise in oil trade volume in 2020

  • About 50 percent of the 2.5 million bpd of oil products it trades currently are hedged
  • The company is also looking at building its capacity in trading liquefied natural gas

SINGAPORE: Saudi's Aramco Trading Company (ATC) expects to increase its oil trading volume to 6 million barrels per day (bpd) in 2020, 50 percent higher than current levels, the company's top official said on Monday.

"Currently ... we're at 4 million barrels per day and with expansion I think our target is 6 million barrels per day," President and Chief Executive Ibrahim Al-Buainain said at the Asia Pacific Petroleum Conference (APPEC).

About 50 percent of the 2.5 million bpd of oil products it trades currently are hedged, he said.

The company is also looking at building its capacity in trading liquefied natural gas (LNG), using its Singapore office as a trading hub, Buainain said.

ATC plans to set up its European office in either Geneva or London and also aims to have an office in Fujairah to manage oil storage, he said.

In Singapore, Buainain said he expects the company's office to grow to 30 to 40 people within the next two years.

ATC also expected to benefit from a switch by ships to cleaner fuels in 2020 as mandated by the International Maritime Organization.

"The second-hand effect of the IMO is the oversupply of high-sulphur fuel oil (HSFO) which in our case is a positive because we are net short on fuel oil and that will help us in meeting our requirements (for HSFO) in power generation," Buainain said.

Buainain has headed the trading arm of Saudi Aramco since 2016.

ATC was set up in 2012 to market refined products, base oils and bulk petrochemicals. It started trading non-Saudi crude oil and refined products from its overseas refineries in the past years as the world's largest oil exporter seeks to optimise profits.