Dubai: Aldar Properties pulled out higher revenues (up 28 per cent to Dh1.58 billion) and gross profit (a gain of 39 per cent to Dh753 million) for the first three months of 2017, in a performance markedly different from the slowdown in Abu Dhabi’s property market. It was built around development sales of Dh1 billion, and with plot sales also lending a strong hand of about Dh100 million.
But its net profit took a dip, to Dh641 million from Q1-16’s Dh654 million, which top Aldar officials said had to do with limited infrastructure handovers happening last quarter and thus generating much lower “other income” than in past years.
Going forward, the master-developer said there will be further mid-market launches this year across its land bank. It was last month that Aldar ventured into this space, offering sub-Dh1 million apartments on Reem Island. (Units in three buildings were offered on sale, while another three were retained for its leasing portfolio. But sales proceeds from The Bridges do not feature in the Q1-17 numbers.)
“Aldar has a 70 million square meters land bank, 90 per cent of which is in the investment zones,” said Talal Al Dhiyebi, Chief Development Officer. “Mid-market properties will be a recurring theme in our development launches this year, and will also cover locations beyond Yas and Shams.”
Aldar’s push into the affordable space could be a turning point for the wider property market in Abu Dhabi. It could convince other developers to get in as well, more so as Aldar confirmed that 70 per cent of buyers at The Bridges were first-timers.
As for new projects, it will not be all residential for Aldar. It has earmarked a Dh3 billion capital expenditure to create a portfolio of new assets, which include a hotel near Yas Mall and “bolt-on automotive retail facility” on Yas Island. Also on its spending plans is a major expansion at the mall in Al Ain, according to Greg Fewer, Chief Financial Officer. These would go a long way toward boosting the recurring revenue net operating income to Dh2.2 billion by 2020 from Dh1.6 billion. (In Q1-17, it was Dh402 million.)
“We will continue to explore future growth possibilities deliberately, including in categories other than residential,” said Fewer.
The first quarter numbers show the merit from doing so. The Yas Mall has a trading occupancy of 95 per cent, while the developer’s residential and office portfolio has an occupancy of 90 and 95 per cent. And its hotels averaged 84 per cent, well ahead of the 76 per cent for Abu Dhabi hotel sector as a whole.
Last month’s Cityscape event in Abu Dhabi did see some of the other developers testing the offplan waters, but such activity remains muted. The market continues to see softness in sales and leasing demand.
According to Fewer, Aldar’s been able to buck prevailing market trends because of the “construction on-site and from the tremendous activity in off-plan launches. There’s also increasing interest among investors for our land sales. In the first quarter, most of this were on Abu Dhabi island itself.” (In the year to date, Dh2.3 billion worth of construction contracts were awarded, principally at Yas Acres and at Mayan.)
The CFO declined to say whether anything restructure was planned for its Sukuk commitments. The next maturity is due December 2018.
Aldar’s mid-market strategy delivers a hit
Mohammad Khalifa Al Mubarak |
All units at the three towers released for sale as part of The Bridges project are sold out. The studio units had a launch price of Dh450,000. “The Bridges sold out in three weeks demonstrating real demand for the right product at the right price,” said Mohammad Khalifa Al Mubarak, CEO, in a statement. “Looking forward, our fully committed Dh3 billion investment programme paves the way for future growth in recurring revenues.”
