Aldar to stick to schedule on new developments

Dubai: Aldar Properties is planning to stick to its earlier schedule for new developments, with the upcoming Cityscape Abu Dhabi in April likely to see new project launches.

“We have not changed the development plan, though, obviously, we are monitoring the situation on the ground closely,” Greg Fewer, company’s Chief Financial Officer, said in a conference call on Thursday. “At the same time, we are moving ahead with all of the existing projects and those that were announced earlier.” Last year, it came out with the first off-plan sales in Abu Dhabi in four years with the launch of the Al Hadeel and Ansam projects.

The development pipeline is to add 7,3000 new units “across existing destinations over the next four or five years”, Aldar said in a statement issued for the 2014 financials. For Aldar to maintain that pace of activity will be a significant dynamic for Abu Dhabi’s property market. Unlike the situation in Dubai, Abu Dhabi’s private developers are far from pulling their weight in terms of new residential project launches ... at least on available evidence.

And Aldar has got the land spread to make things happen. “We have got 77 million square metres and that is quite a lot,” said Fewer. “It’s more than enough to fulfil our development needs.”

On whether the gain in net profits — 2 per cent over 2013’s Dh2.23 billion — was on the lower side, Fewer said it had to be looked in a proper context. “2014 numbers were about the quality of the earnings — and we very happy with that,” he added. “There were significant gains in recurring earnings with the residential portfolio [of 2,900 units] fully let. We are booking a Dh1 billion gross purely from the recurring income and the next 18 months should see a continuation of that strong growth. There was the revenue recognition from the 1,975 residences that were handed over to buyers.

“The 2014 net growth should also be seen in perspective against the 2013 numbers where there was a one-time gain emerging out of the merger [with Sorouh]. If we were to adjust for that, the 2014 income growth has been significant.”

Refinancing programme

Gains continue to be made to bring down the debt burden — as of end 2014, it stands at Dh9.17 billion and down from Dh9.57 billion. Another big positive from last year was the completion of a refinancing programme, “enabling a reduction in the weighted average interest rate on debt to 2.7 per cent as at December 31, 2014”.

“We had a clear strategy on dealing with debts post-merger [with Sorouh Properties] and executing well against it,” Fewer said. “We paid down a further Dh1 billion [last year] and continue to see significant improvements.” The company’s forecast is to bring it down to around Dh6 billion by end-2015.

There is also cash coming in, “with Dh5.7 billion of receivables and infrastructure recoverable due from the Government of Abu Dhabi”. In the fourth quarter, the developer received a ratings upgrades from Moody’s and Standard and Poor’s, and the issued debt to investment grade.

According to Simon Townsend, Business Development Manager at the consultancy DTZ, there has been “continued emphasis on delivery and upgrade of infrastructure and support services” schools and health care facilities in Abu Dhabi. “Many of the developments are now providing a more integrated opportunity providing more confidence to sub-developers to launch and complete their projects. The residential sector is seeing a number of prominent project completions and we anticipate some additional launches before Abu Dhabi Cityscape,” he said.

“In the commercial market, there’s been continued growth, [and] the potential creation of the Abu Dhabi financial district on Sowwah Island is seeing a significant push on commercial completions. Current rental levels in the vicinity have grown, providing an additional incentive to developers to complete to capitalise on the current market trends,” he added.

Shares of Aldar Properties ended 0.39 per cent higher at Dh2.590 on Thursday on Abu Dhabi Securities Exchange.