Union Properties PJSC, a Dubai-based developer, reported a record loss as costs rose and property values in the Persian Gulf emirate slumped.
The third-quarter loss widened to 1.1 billion dirhams ($289 million) from 452 million dirhams a year earlier, the company said in a statement today. Direct costs jumped to 726 million dirhams from 415 million dirhams.
Dubai’s property market went from being one of the world’s best-performing to the worst following the global credit crisis three years ago, with home prices slumping 64 percent since the mid-2008 peak, according to Deutsche Bank AG estimates. Emaar Properties PJSC, Dubai’s biggest developer, reported a 34 percent decline in third-quarter profit as revenue declined and property deliveries slowed.
Union Properties has been in talks with lenders to restructure debt, Chairman Khalid bin Kalban said in June. The developer is repaying borrowings this year with the 1.1 billion dirhams it raised from selling the Ritz Carlton Hotel and another 900 million dirhams from other property sales, he said.
Profit excluding changes in the value of Union Property’s real estate was 107 million dirhams, compared with a year-earlier loss of 32 million dirhams. Revenue increased 75 percent to 955 million dirhams. The company wrote down the value of its real estate by 1.17 billion dirhams in the quarter, compared with 420,000 dirhams the year-ago period.
Union Properties developed the 80-story Index Tower and the Limestone House apartment complex as well as villas and office buildings.
The shares were little changed in Dubai trading at 30.3 fils as of 1:02 p.m. They’ve declined 16 percent this year, cutting the company’s market value to 1.02 billion dirhams. The stock peaked in July 2007 at more than 5 dirhams.