Costs and low sales hit profit of RAK developer

UAE real estate developer RAK Properties has posted an 82 per cent drop in annual net profit for the second quarter of 2018, with lower sales and higher expenses hitting its earnings.

Net profit plummeted to Dh4.3 million from Dh22m in the corresponding period of 2017, while revenue for the quarter dropped more than 80 per cent year-onyear to Dh18.4m, the company said in a filing to the Abu Dhabi stock exchange yesterday.

Revenue from sale of properties stood at Dh2.9m, down from Dh82m in the second quarter of 2017, and the company said it made a Dh14.2m loss on general and administrative expenses during the period.

The company also registered a Dh7.9m loss on cost of revenue – a loss that narrowed from a loss of Dh60m in the second quarter of 2017. The company said it made a Dh55.8m loss on purchase of property and equipment, according to the filing.

RAK Properties share price was down almost 3 per cent to Dh0.65 yesterday, its lowest

level since June 27.

RAK Properties is the emirate of Ras Al Khaimah’s biggest property developer. It is building several residential and hospitality projects at present, including the Anantara, Intercontinental and Arjaan by Rotana hotels on the Mina Al Arab island resort and housing schemes Flamingo Villas, Gateway Residence, Bay Residences and Julphar Residences.

Total assets stood at Dh5.3bn as of June 30.

“The company is making significant headway on residential projects both under construction and due to launch over the next year, and we see robust and positive results for the upcoming second half of the year,” RAK Properties’ managing director Mohammed Al Qadi said last week, before the results were posted.

In March RAK Properties appointed Samuel Sidiqi as its new chief executive effective from May 2018.

Institutional investors that hold shares in the company include asset managers such as Blackrock, Vanguard, State Street Global Advisors and TIAA, a pension fund for US teachers.