Dubai developer Damac reports widening loss as sales almost halve

Damac, the Dubai developer behind some of the emirate’s glitziest property projects, reported a widening first-quarter loss as sales almost halved.

The developer reported a first quarter loss of 189.6 million dirhams ($51.6 million), compared to a loss of 106.1 million dirhams in the year-earlier period. Revenues dropped by about half to about 642.2 million dirhams, it said in a stock exchange filing.

Dubai property developers have reported a recovery in demand for high end properties in recent weeks as transaction activity in the secondary market picked up. But at the same time, off-plan sales remain under pressure.

S&P said in March it expected Dubai’s GDP growth to recover while real estate remained squeezed.

“We expect real estate companies’ profitability to remain under pressure and leverage to be high,” said S&P Global Ratings credit analyst Sapna Jagtiani. “Absent a substantial recovery in revenue, companies are likely to focus on cost optimization, proactively managing their liquidity, and preserving their cash flows. Rated Dubai-based real estate companies still have good liquidity and access to funding, however, despite currently trying times.”