Abu Dhabi - Arabstoday
Indebted Dubai developer Nakheel, whose extravagant projects spurred the emirate\'s debt crisis, reported a first-half net profit on Monday as it handed over stalled projects. Nakheel, which built man-made islands shaped like palms and a map of the world, said it posted a profit of 526 million dirhams ($143 million) in the six months to June. It gave no comparison for 2010. \"The profits make positive headlines but the underlying details are not clear,\" said Ian Albert, regional director for Colliers International. \"I would think these profits are from payments made for projects that have been promised years ago and finally delivered now. They do not necessarily indicate much about the health of Dubai\'s real estate market.\" Nakheel was at the centre of Dubai\'s property collapse in 2008 when house prices plunged by about 60 percent, forcing many developers to abandon projects. The developer wrote off up to 78.6 billion dirhams ($21.4 billion) of its real estate assets due to the crisis, according to a bond prospectus released earlier this year. \"Dubai\'s real estate has seen declines and some minor rises this year. But it has been largely flat and may remain so as people are cautious of what is happening in the rest of the world, especially Europe,\" said Albert.Nakheel completed a $16 billion debt restructuring earlier this year and is now wholly-owned by the Dubai government, as arranged under former parent Dubai World\'s own restructuring. The developer said first-half revenue was 1.5 billion dirhams, mainly driven by the handover of properties from a number of its projects. It also credited retail and leasing businesses for profit growth while cost cuts helped reduce overhead by 131 million dirhams compared with the same period in 2010.No further details were provided in the statement. The developer did not issue any financial statements last year, as it struggled to complete a complex restructuring. The developer\'s chairman said in September that Nakheel made 860 million dirhams profit in 2010. As part of its restructuring deal, Nakheel issued $1.03 billion under its first tranche of the $1.31 billion sukuk in September. The second tranche is expected to be issued before the end of the year. \"Being profitable gives a signal to sukuk holders that the company is less risky....\" said a senior executive at an advisory firm, who did not wish to be named.The Dubai government has given as much as $8.71 billion to support Nakheel which announced in August that it would soon deliver pending projects and pay investors. \"The company has remobilized a number of its construction sites where work is progressing as per its business plan,\" it said in the statement. Some of Nakheel\'s ambitious projects like Palm Jebel Ali, another palm-shaped island stretching into the sea, are yet to be completed.