Dubai-based construction company Arabtec Holding Co posted its first annual loss on Sunday (February 21). It is the latest firm to raise the alarm about a slowdown that has started to grip the real estate sector in the emirate.
The company has reported a net loss of AED2.35 billion or 51 fils per share in 2015, compared with a profit of AED214.6 million, or 5 fils per share a year earlier.
The annual revenue dropped 12 per cent to AED7.3bn, Arabtec said in a statement.
During the fourth quarter, the company suffered a net loss of AED360m, compared with a loss of AED94.4m in the same period in 2014.
The firm cited the “difficult environment that the regional construction market is facing” for the loss and said it’s seeking to further reduce costs.
It had also reported widening losses in the preceding four quarters that it attributed to increased costs.
The company, whose largest shareholder is Abu Dhabi’s state-owned fund Aabar, has undergone major upheavals over the past two years, with the departure of its chairman and most of its senior management, while a much-touted $35.8bn project to build AED1m homes in Egypt failed to be agreed upon.
Earlier this month, developers Emaar Properties and DAMAC Properties had posted poor quarterly results, stoking fears that Dubai’s real estate sector was heading for a crash similar to that in 2008.
Emaar’s net profit dropped to AED1.03bn in the fourth quarter compared with AED1.05bn a year earlier, while DAMAC’s net earnings during the same period fell by 12 per cent to AED844m from AED959.3m in 2014.
“The Dubai real estate market is at a consolidation point in the cycle and the rapid growth witnessed in 2012-2014 is now behind us,” said Hussain Sajwani, Chairman of DAMAC.
He stressed that the current environment is very different from that of 2008 as stakeholders, such as government, developers, providers of capital and investors, have learnt their lessons from the earlier property crisis.
Sajwani expects that the total supply in Dubai will fall short by 10,000 new units in 2016 and this shortage will act as the “cornerstone of the market resilience” to “drive the market back into positive-pricing growth territory in the second half of the year or early 2017.”
Source: Press Release