Strong results see Barwa net double for 2010
Qatar developer produces strongest gains as project returns increase
Barwa Real Estate Company almost doubled its net profit last year against 2009 and sales on its developments soared to produce the strongest results so far by a Gulf developer.
The Doha-based firm behind a number of multi-billion riyal developments, including Barwa City, said after-tax gains rose to QR 1.405 billion against QR 765.8 million the previous year. Profits on the sale of properties rose 89.1% from QR 87.6 million to QR 159.4 million, according to its published results to the Qatar Exchange.
Last year the company handed out a number of construction contracts as secure financing moved to building work, including a QR 676 million deal with Shapoorji Pallonji to build 13 buildings for the first phase of the Barwa City development. Work on the US $750 million first phase, which includes the construction of 128 low-rise residential buildings and related infrastructure over 850,000m2, is due to be completed in the third quarter this year.
Barwa Real Estate’s total assets more than doubled in value to QR 73 billion from QR 34 billion, with its cash position rising from QR 1.927 billion to QR 12.98 billion and the returns from property under development more than doubling from QR 14.5 billion to QR31.57 billion
But the company also posed an operating loss before working capital charges of QR 2 billion, higher than the QR 1.5 billion loss from the previous year.
Last year, Barwa City Real Estate Company – the investment vehicle funding the major project – entered into a Shariah-compliant property purchase deal with Qatari Diar Finance, the investment arm of Qatari Diar, the sovereign developer.
The deal also extended to two other subsidiaries, Barwa Financial District WLL and Barwa Commercial Avenue Company, which essentially provides capital and discharging liabilities previously incurred in connection with those projects.
The terms of the deal follow murabaha principles, in which the borrower pays 20% of capital as down payment before the lender, in this case Qatari Diar Finance, buys the relevant land or property and sells it to the borrower at a high price.
Barwa’s ‘due from customers from Islamic finance’ – classed as a company asset – is almost four times bigger than at the end of 2009, at QR 1.993 billion from QR 510 million.
The company’s results outstripped those of Qatar rival United Development Company, developer of Pearl Qatar, which saw net profits rise 19% against 2009. Mazaya Qatar Real Estate saw net profits fall 4% though it saw a sharp rise in the returns from projects in progress.
Barwa’s shares closed down 5.5% to QR 31.5 yesterday in Doha.