Dubai Holding Commercial Operations Group (DCOG), the real estate and hospitality business, has posted a loss of $6.4bn last year against a net profit of $4.74bn the year before, due to impairments coupled with a slump in the local property market.
Total revenues in 2009 fell 28 percent to $2.6bn compared with 2008.
The company – which owns Dubai Properties Group, TECOM Investments and Jumeirah Group – said the global hospitality industry faced challenges in 2009 due to the global downturn.
“The decline in revenues and operating profits reflect the decrease in land sales due to the significant reduction in demand within the real estate market and the re-phased handovers of projects,” DHCOG said.
“Nevertheless, a number of major projects were delivered by Dubai Properties Group in 2009, including the first phase of The Villa and Shorooq. Most of the remaining projects will commence delivery during 2010 and this will reflect positively in the financials.”
The group recently merged its three struggling property companies – Tatwee Dubai, Sama Dubai and Dubai Properties – in an effort to mitigate a 50 per cent fall in prices in the past 18 months.
It said 6.1 billion dollars of the losses were impairment charges, in accordance with international financial reporting standards.
The company added that it was considering a range of measures to raise its working capital, which could include selling some assets and rolling over maturing loans.
CEO Ahmad Bin Byat expected that a corner had been turned.
He said: “We have carried out sound strategic measures in 2009, in the form of business re-alignment and financial initiatives, which place us in a strong position to capitalise on opportunities during the recovery phase. There is no need to restructure outstanding debt.”
“During 2010, it is expected that the real estate market will stabilise and then steadily recover from 2011 onwards. By 2012, Dubai Properties Group expects to complete and hand over approximately 21,000 units.”
The group is owned almost entirely by Dubai’s ruler Sheikh Mohammed bin Rashid al-Maktoum, and forms part of Dubai Holding, which is controlled by him.
Last week the conglomerate’s investment arm, Dubai International Capital (DIC), which owns Travelodge, requested a three-month extension on debt repayments, raising new concerns about the financial stability of the Gulf state.