- Damac Properties has reported weaker profits for Q3 2017 despite a splurge on marketing spending.
- The developer is behind the only Trump-branded golf course in the Middle East.
- Damac has handed over hundreds of units worldwide including projects in Jordan and Saudi Arabia.
A splurge on marketing spending failed to deliver a bottom-line boost to Damac Properties.
The Dubai-based developer is well known for its marketing gimmicks - such as including speed boats and sports cars with the homes it sells - and often has a large presence of salespeople at events like the annual Cityscape shows in Dubai and Abu Dhabi.
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However, the developer’s marketing spending comes amid a subdued property market in the emirate where it faces stiff competition from rivals developing thousands of new units.
On Wednesday, Damac reported its third quarterly decline in profits on the trot, reflecting the headwinds facing the wider property market.
Third-quarter profit for Damac fell 20 percent to 719.34 million dirhams ($195.86 million) from a year earlier, even as the developer ramped up marketing expenses by a third to 96.45 million dirhams.
Despite the decline, Damac Chairman Hussain Sajwani stayed optimistic and gave an upbeat assessment of the market.
“Dubai’s property market has been steadily solidifying in 2017, with increasing sales transactions and robust fundamentals, and our medium to long term outlook remains positive,” he said.
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“Dubai’s property sector is feeling the positive effects of the emirate’s appeal and growing sophistication on the world stage. This is evident from the growing real estate sales transactions at Dubai Land Department, and we are confident of the growth prospects for the sector going forward.”
But that view does not chime with many brokers concerned about the potential over-supply of new homes hitting the
market.
Property broker JLL estimates that as many as 80,0000 units could be delivered by the end of 2019, with developers including Nakheel and Deyaar, which also reported earnings this week, announcing new projects worth billions of dollars in recent months.
“This renewed sentiment does however raise the prospect of a potential oversupply on the back of sales achieved through more attractive payment terms,” said Craig Plumb, the regional head of research at JLL.
Damac handed over more than 850 units across its international developments which include its Esclusiva project in Saudi Arabia and its development project in Jordan.
By Sean Cronin
