Property developer known for marketing gimmicks reports earnings decline
LONDON: A splurge on marketing spending failed to deliver a bottom line boost to Damac Properties — the developer behind behind the only Trumpbranded golf course in the Middle East.
The Dubai-based developer is well known for its marketing gimmicks such as including speed boats and sports cars with the homes it sells and often has a large presence of salespeople at events like the annual Cityscape shows in Dubai and Abu Dhabi.
But the developer’s latest marketing drive comes amid a subdued property market in the emirate where it faces stiff competition from rivals developing thousands of new units.
On Wednesday Damac reported its third quarterly decline in profits on the trot, reflecting the headwinds facing the wider property market.
Third-quarter profit fell 20 percent to 719.34 million dirhams ($195.86 million) from a year earlier even as the developer ramped up marketing expenses by a third to 96.45 million dirhams.
Despite the decline, Damac Chairman Hussain Sajwani gave an upbeat assessment of the market.
“Dubai’s property market has been steadily solidifying in 2017, with increasing sales transactions and robust fundamentals, and our medium to long term outlook remains positive,” he said.
“Dubai’s property sector is feeling the positive effects of the emirate’s appeal and growing sophistication on the world stage. This is evident from the growing real estate sales transactions at Dubai Land Department and we are confident of the growth prospects for the sector going forward.”
But that view does not chime with many brokers concerned about the potential over-supply of new homes hitting the market.
Property broker JLL estimates that as many as 80,0000 units could be delivered by the end of 2019 with developers including Nakheel and Deyaar, which also reported earnings yesterday, announcing new projects worth billions months.
“This renewed sentiment does however raise the prospect of a potential over supply on the back of sales achieved through more attractive payment terms,” said Craig Plumb, the regional head of research at JLL.
US President Donald Trump’s eldest sons Donald Trump Jr. and Eric Trump visited Dubai in February for the opening of of dollars in recent the Trump International Gulf Club.
The developer announced a tieup with the Roberto Cavalli Group in the third quarter for a villa development called Just Cavalli.
The developer also handed over more than 850 units across its international developments which include its two-tower Esclusiva project in Saudi Arabia and its three-tower development project in Jordan.