Union Properties declares second quarter loss of Dh84m

Union Properties, the master developer behind Dubai's Motor City district, reported a loss for the three months to June 30 as overhead continued to outstrip revenue.

The company reported a loss of Dh84.1 million in the second quarter, compared to a profit of Dh24.7m in the same period a year earlier. Revenue declined 15.5 per cent year-on-year to Dh104.6m.

About Dh30m of the loss declared for the second quarter was attributed to a depreciation in the value of financial instruments held by the firm. However, the bulk of the company's losses were due to the fact that its combined direct costs, finance costs and general and administrative expenses of Dh163.2m exceeded revenue.

Losses for the first six months of 2018 amounted to Dh82.3m, compared to a profit of Dh207.4m in the same period last year. Year-on-year revenue for the six-month period declined 13 per cent to Dh207.6m, but combined costs amounted to more than Dh316.7m. A loss of Dh3.6 million was also declared for the six-month period on the sale of investment properties for Dh46.2m.

Union Properties did not immediately respond to a request from The National for comment.

Two years ago, Union Properties announced at the Cityscape Global exhibition in 2017 that it had signed a Memorandum of Understanding with the Middle East arm of China State Construction Engineering Corporation (CSCEC) to jointly develop a revised master plan for Motor City, which would cost Dh8bn to bring to life. Under the agreement, the pair were due to be bringing forward 44 new high- and low-rise buildings, 150 villas and a range of other residential, commercial, hospitality and entertainment facilities.

Union Properties' shares closed 0.87 per cent lower on Wednesday, at 34.3 fils per share. They have declined in value by 16 per cent since the start of 2019.