The business and its parent are part of a matrix of firms known informally as Dubai Inc, which includes conglomerate Dubai World, and which were badly battered by the financial crisis, plunging Dubai into a debt crisis in 2009.

“DHCOG was a big worry. After Dubai World, people have been concerned about their debt pile,” said Mohammed Ali Yasin, chief investment officer at CAPM Investments in Abu Dhabi. “The fact they were able to refinance their loans and are confident of repaying the bonds supports the fact that a recovery is slowly coming back to Dubai.”

DHCOG has a 250 million Swiss franc-denominated bond due in 2011, and a $500 million bond due next year.

“The solid set of numbers combined with the comments on a focus on core operations and repayment of the forthcoming bond maturities is positive and encouraging,” said Chavan Bhogaita, head of markets strategy department at National Bank of Abu Dhabi.

“However, the market reaction may be muted because there is still uncertainty surrounding the restructuring at Dubai Group,” he said, adding that from a bondholders perspective, DHCOG is ringfenced away from the parent company’s investment arms.

Dubai Group, with investments mainly in financial services, is currently in discussions with lenders over a $10 billion restructuring with an agreement not foreseen in the near future.

Despite ongoing restructuring talks — led by the $4 billion loan refinancing for the emirate’s sovereign wealth fund Investment Corporation of Dubai - optimism among investors appears to be returning.

Dubai’s credit default swaps (CDS), or the cost to insure sovereign debt, have been consistently narrowing in recent weeks, with the emirate seen as a safe haven amid the political instability engulfing the wider region.

CDS prices stood at 366 basis points at 1407 GMT according to data from Markit, from a high this year of 455 points in February.  

The impact has been renewed interest in Dubai names in the bond and equity markets.

DHCOG said it earned 225.3 million dirhams ($61.36 million) last year, up from a record $6.2 billion loss for 2009. The company had said it may resort to asset sales to deal with its debt pile.

On Thursday, DHCOG said it sold its investment in luxury hotelier Orient Express Hotels in 2010 and booked AED59.2 million.

Revenues rose 43 percent to AED13.5 billion in 2010 driven by the handover of completed projects by Dubai Properties Group in the emirate, it said in a statement.

Impairments for 2010 stood at AED5.5 billion compared with 20.4 billion for the year earlier.

DHCOG, whose assets include the Jumeirah hotel group and business parks and hospitality units, said it planned to reduce its exposure to non-core assets.

“It’s great to see the revenue drive the bottom line,” said Daniel Broby, chief investment officer at asset manager Silk Invest in London.

“I’m very pleased to hear them say they want to focus on repaying an upcoming bond. It should help with the momentum that Dubai has generated from investors of late.”