Majid Al Futtaim Properties feels pinch
LONDON: Dubai-based Majid Al Futtaim Properties has posted a profit of 2.19 billion dirhams ($596.25 million) for 2017, down almost 7 percent on the previous year, citing lower hotel revenue and poor macroeconomic conditions in Egypt as having a negative impact on the company's results.
Hotel business revenue also weakened, according to a filing on Nasdaq Dubai, due to a drop in average daily rates. The firm said the recent Qatar travel boycott had also affected tourism in the UAE.
Majid Al Futtaim Properties, the real estate arm of Majid Al Futtaim Holding, also had to include an impairment loss of 277 million dirhams on the planned City Center Al Maza mall in Egypt due to a deteriorating Egyptian economy coupled with high taxes and reduced subsidies that have pushed up inflation and a decline in consumer spending. The mall is under construction and due to open in 2019.
Majid Al Futtaim had to mark down an impairment of 185 million dirhams on the new Mall of Oman — which is expected to open in 2020 — due to occupancy levels at the shopping center being lower than initially estimated.
The company did, however, benefit from the opening of the superregional Mall of Egypt in the first quarter of 2017 which brought in an additional 68 million dirhams of revenue.
The mall features Ski Egypt, Africa's first indoor ski slope, a 21 multi-screen VOX cinemas and a family entertainment center.
Coupled with higher rents charged at the Mall of the Emirates in Dubai, revenues for 2017 across all business arms rose to 4.6 billion dirhams compared with 4.49 billion dirhams the previous year.
The property firm is currently developing ‘My City Center Masdar' a 338 million dirham project in Masdar City, Abu Dhabi, due to open at the beginning of 2019. It has also started construction on a new Abu Dhabi mall, the City Center Al Jazira, due to be completed in 2021.
A new Dubai based hotel, Aloft City Center Deira, is due to open in the second quarter of this year, while the company is continuing to invest in Oman with the development of the City Center Sohar mall, expected to open later this year.